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World stocks cautious on US growth

Apr 29 2011 13:39 Sapa-AP

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Paris - A slowdown in growth in the US and mixed corporate earnings dampened stock market sentiment around the world on Friday.

Data released the previous day showed the world's biggest economy lost steam in the first three months of the year. That helped push oil prices to near $112 a barrel and pushed the dollar down against the yen and the euro.

In early European trading, France's CAC-40 slipped 0.1% to 4 103 while Germany's DAX was up 0.1% to 7 482. Britain's FTSE 100 was closed as the country celebrated the nuptials of Prince William and Kate Middleton.

Wall Street was set for a lower opening, as Dow Jones industrial futures sagged by 14 points to 12 694 and S&P futures dropped marginally to 1 353.10.

Outside of the US, economic indicators were also downbeat. Inflation in the 17 euro countries crept up to 2.8% in April, official data showed, keeping the pressure on the European Central Bank to raise interest rates again later this year.

That has aroused concerns that higher borrowing costs may make it harder for financially troubled countries such as Greece, Ireland and Portugal to return to growth and manage their debt.

Other signs for the eurozone remained mixed. Unemployment was steady at 9.9% in March, although Spain's rate rose sharply to a new eurozone record of 21.3% in the first quarter.

Nearly 5 million people are out of work now in Spain, the government said, adding pressure on the country as it tries to recover from nearly two years of recession and convince investors that it can handle its own debt load.

Two of Europe's industrial bellwethers reported hefty growth in first quarter earnings. German car maker Daimler AG said net profit nearly doubled to €1.2bn in the period as its luxury Mercedes brand kept up its strong sales performance in China.

Total, Europe's third largest oil producer, said its profit grew 50%in the first quarter thanks to sharply higher oil prices.

Meanwhile in Asia, equity markets also reacted nervously to the weak US data overnight. Demand from the US for Asia exports may actually slow," said Dariusz Kowalczuk of Credit Agricole in Hong Kong.

Hong Kong's Hang Seng index closed down 0.4% to 23 805.63, with yuan units of Hui Xian Real Estate Investment Trust falling 9.4% in their trading debut. They are the first equity securities denominated in China's currency to trade outside of mainland China.

South Korea's Kospi index slipped 0.7% to 2 192.36, with technology shares dragging the index down.

Samsung Electronics lost 0.8% after the company announced its first quarter profit fell 30% on declines in memory chip prices and reduced profitability in liquid crystal displays and flat screen televisions. Rival Hynix Semiconductor slid 1.6%. LG Electronics lost 3.7%.

Japan's Nikkei 225 was closed for the start of Golden Week holiday. Benchmarks in Singapore, Taiwan, Indonesia, India and Thailand were also down.

Mainland Chinese shares snapped a five-session losing streak as the release of a survey showing lackluster growth in manufacturing suggested inflation may be under better control than earlier feared, easing the need for further credit tightening measures.

The Shanghai Composite Index gained 0.9% to 2 911.51, while the Shenzhen Composite Index gained 1.4% to 1 200.62. Shares in power companies, non-ferrous metals and steels led the gains while banks fell back on profit-taking after recent advances spurred by better-than-expected earnings reports.

Benchmark crude for June delivery was down 19c at $112.67 a barrel at midday Paris time in electronic trading on the New York Mercantile Exchange.

The euro was higher at $1.4867 from $1.4821 late on Thursday in New York. It had peaked at $1.4881 on Thursday, its highest point in nearly 17 months before softening. The dollar was down to ¥81.45 from ¥81.57.
dollar  |  asian martkets  |  markets  |  oil  |  us economy
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