AP News

World markets fall on signs of fading growth

BEIJING (AP) — World markets fell Friday as disappointment over weak economic indicators from the United States, China and Europe offset hopes for more stimulus from central banks.

Oil fell below $96 a barrel after a member of the U.S. Federal Reserve's policymaking board dampened hopes for additional stimulus.

Japan's Nikkei 225 declined 1.2 percent to 9,070.76 and China's benchmark Shanghai Composite Index lost 1 percent to 2,092.1. Hong Kong's Hang Seng shed 1.3 percent to 19,880.03.

In Europe, Britain's FTSE 100 fell 0.1 percent to 5,768.68. Germany's DAX fell 0.3 percent to 6,928.79 while France's CAC-40 lost 0.6 percent to 3,413.65.

Wall Street headed for a marginally higher open. Dow Jones industrial futures rose slightly to 13,047 while S&P 500 futures were nearly unchanged at 1,400.20.

Traders were dismayed by U.S. data showing the number of people seeking unemployment assistance rose for a second straight week.

Markets that rose earlier after minutes of the Federal Reserve's last policy meeting showed bankers favored more stimulus fell after the president of the St. Louis Fed said officials were considering new data that might make further action unnecessary.

"There now once again appears to be a state of confusion as to what the market can expect from the Fed at its next meeting in mid-September," analyst Cameron Peacock of Australia's IG Markets said in a report.

Elsewhere in Asia, South Korea's Kospi declined 1.2 percent to 1,919.81, while Australia's S&P ASX 200 was off 0.8 percent at 4,349. India's Sensex shed 0.3 percent to 17,787.30.

In China, investors were disappointed by a survey this week that showed manufacturing activity shrank in August and new export orders fell.

Shanghai's closing was the lowest in 40 months. PetroChina Ltd., Asia's biggest oil and gas producer by volume, lost 0.3 percent after its second quarter gross margins were the lowest in three years. China Shenhua Energy Co., the nation's biggest coal producer, lost 1.7 percent and China Construction Bank Ltd., one of China's four major state-owned lenders, lost 0.8 percent.

"Investors prefer cash after the recent gains in some shares," said analyst Sun Chong at Sinolink Securities in Shanghai.

Beijing cut interest rates twice in June and is pumping money into the economy through high spending on public works. Several major cities have announced multibillion-dollar spending plans but analysts expect major initiatives to be put off until after a new Communist Party leadership is installed this fall.

U.S. new home sales rose 3.6 percent in July, but DBS Group said that only offset a drop of identical size the previous month.

Aside from improved employment and retail sales in July, "the data has been unchanged or slightly worse," DBS Group economists said in a report.

In Europe, the PMI of overall economic activity in the 17-country eurozone was at 46.6 points in August, up only slightly from July's 46.5.

Analysts said the number shows the eurozone is firmly in recession, which will hurt efforts to reduce debt and boost investor confidence. Any improvement is likely to depend on governments and central banks doing more to reform their economies and boost demand.

The European Central Bank is expected to present in coming weeks a plan to help indebted countries such as Spain and Italy by buying their government bonds.

Greek Prime Minister Antonis Samaras will travel to Germany on Friday to meet with Chancellor Angela Merkel, and to France on Saturday for talks with President Francois Hollande.

Samaris is asking that Greece be given more time to meet deficit targets and implement reforms. Germany's finance minister, Wolfgang Schaeuble, poured cold water on that idea, saying more time would not solve Greece's problems.

In currencies, the euro fell to $1.2551 from $1.2566 late Thursday in New York. The dollar rose to 78.56 yen from 78.47 yen.

Benchmark oil for October delivery fell 54 cents to $95.73 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 99 cents to finish at $96.27 per barrel.


AP researcher Fu Ting in Shanghai contributed.

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