World stocks drop amid signs eurozone in recession
PARIS (AP) — World stock markets slid Thursday after a survey suggested the eurozone is in recession and as a modest pickup in the U.S. dashed hopes for more stimulus from the Federal Reserve.
A successful bond sale in Italy — which eased concerns that the country's borrowing rates are spiraling out of control — wasn't enough to buoy markets, although the euro made modest gains. The currency shared by 17 countries rose 0.1 percent to $1.2547.
In afternoon trading in Europe, Germany's DAX was down 0.8 percent to 6,952. The FTSE index of leading British shares, meanwhile, fell 0.2 percent to 5,733, and France's CAC-40 dropped 0.5 percent, to 3,3396.
Trading has been light this week as investors anticipate Fed Chairman Ben Bernanke's speech Friday at an economic symposium that they hoped would indicate Washington is preparing more measures to jump-start the economy. But news that the American economy was picking up damped those expectations. On Wednesday, the Fed's "Beige Book" survey of economic sentiment was fairly positive and the country revised up its growth figures for the second quarter.
The American economy seems to be in an inconvenient middle spot: not growing fast enough to drive down unemployment and spur a global rally, but likely not doing poorly enough to persuade the Fed to step in again.
Ahead of the opening bell, stocks on Wall Street were trending downward. Dow futures were trading 0.2 percent lower at 13,054, while S&P 500 futures were down 0.3 percent to 1,403.50.
Europe, on the other hand, is mired in bad news. August's Economic Sentiment index fell more than expected and suggested eurozone growth could retreat 2 percent this year.
"The survey revealed falls in sentiment in the consumer, services and manufacturing sectors, confirming that the downturn is related to both domestic demand and exports," said Jennifer McKeown, senior European economist for Capital Economics. "And perhaps more worryingly, there is further evidence here of a sharp slowdown in Germany."
Earlier in Asia, the benchmark Shanghai Composite Index dropped to another three-year low on Thursday, losing 0.03 percent to 2,052.58.
Elsewhere, the Tokyo Stock Exchange's benchmark Nikkei fell 1 percent to 8,983.78 and South Korea's Kospi slipped 1.2 percent to 1,906.38. Hong Kong's Hang Seng Index also was down 1.2 percent to 19,545.93, while Australia's S&P/ASX 200 shed 0.9 percent to 4,315.70.
Benchmarks in Singapore, Indonesia and Taiwan also fell.
Concerns about the economy are driving down the price of only since less growth typically means lower demand for energy. Benchmark oil for October delivery fell 17 cents to $95.32 per barrel in electronic trading on the New York Mercantile Exchange.
Elaine Kurtenbach in Tokyo contributed to this report.