AP News

Concerns about euro push world stocks lower


PARIS (AP) — Concerns about Europe's debt crisis, including a downgrade of France's credit rating, weighed on world stock markets Tuesday.

Moody's Investors Service stripped France of its prized AAA rating on Monday, citing its limited prospects for growth and exposure to the crisis that has forced several countries into bailouts.

In late Tuesday trading, Britain's FTSE 100 fell 0.1 percent to 5,730, while France's CAC rose the same amount to 3,442. Germany's DAX also found its footing, rising 0.38 percent to 7,149.

The euro also rose slightly, up 0.23 percent to $1.2809.

Investors are also nervously awaiting another meeting of finance ministers on Greece later in the day. Greece's next batch of rescue loans have been hanging in the balance for weeks, while its creditors decide whether the country has implemented the required reforms. Athens depends on the money to pays it day-to-day bills, and it could run out of cash if it doesn't get the €31.5 billion ($40 billion) loan payment soon.

The back-and-forth over this tranche of loans — it's still unclear if the ministers will decide to give Greece the money — has exacerbated concerns that the currency union is too dysfunctional to solve its problems. Until they move out of crisis mode, the 17 European Union countries that use the euro can't hope to restart growth.

Moody's cited France's exposure to the crisis — and its own struggles with implementing reforms to restore the competitiveness of its economy — in its decision to downgrade its credit rating.

In the U.S., data showed builders started construction last month on the most homes and apartments since July 2008, but that wasn't enough to distract investors from the news in Europe.

"Investors are finding it difficult to shake news that Moody's has stripped France of its top credit rating and that coupled with yesterday's giant gains within the global equities market was enough of an incentive for investors to shy away from risk-on assets," said Shavaz Dhalla, a trader at SpreadEx.

Wall Street opened down with the Dow Jones industrial average falling 0.2 percent to 12,771 and the broader S&P 500 off 0.05 percent at 1,386.

Later in the day, the focus will shift to a speech by Federal Reserve Chairman Ben Bernanke on the state of the world's largest economy. Investors have been hopeful that President Barack Obama and Congress will reach a budget deal before the end of the year to avert tax hikes and spending cuts that could throw the U.S. into recession.

Earlier, Asian stocks were mostly down. Japan's Nikkei 225 index edged down 0.1 percent to close at 9,142.64. Hong Kong's Hang Seng fell 0.2 percent to 21,228.28 while South Korea's Kospi added 0.6 percent to 1,890.18.

Mainland Chinese shares also ended down on lower trading volumes, analysts said. The Shanghai Composite Index fell 0.4 percent to 2,008.92 and the smaller Shenzhen Composite Index lost 0.2 percent to 799.35.

Benchmark oil for December delivery was down 81 cents to $88.47 in electronic trading on the New York Mercantile Exchange.

___

AP writer Pamela Sampson in Bangkok and AP researcher Fu Ting in Shanghai contributed to this report.


Soul Searcher
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus