World stocks lower, dollar surges against yen (AP)

October 31, 2011

BANGKOK – World stock markets were mostly lower Monday as investors shifted their focus from Europe’s debt woes to the strength of the U.S. economy. Japan sold the yen to limit its export-sapping strength.

Benchmark oil for December delivery slipped below $93 per barrel and the dollar strengthened against the euro and the yen.

European shares sank in early trading. Britain’s FTSE 100 lost 0.8 percent to 5,655.77 and Germany’s DAX fell 1 percent to 6,285.53. France’s CAC-40 slid 1.4 percent to 3,302.24. Wall Street also appeared set for a lower opening, with Dow Jones industrial futures 0.7 percent lower at 12,081 and S&P 500 futures down 0.8 percent at 1,270.10.

Asia set the tone for a day of muted trading. Hong Kong’s Hang Seng slipped 0.7 percent to 19,864.87 and South Korea’s Kospi fell 1.1 percent to 1,909.03. Benchmarks in Australia, Singapore and Taiwan also posted losses.

The Nikkei 225 index in Tokyo swung between positive and negative territory after Japan intervened to weaken its currency, which had earlier hit a new post World War II high against the greenback. The Nikkei closed 0.7 percent lower at 8,988.39.

The strong yen has dented earnings of Japanese corporations such as Nintendo Co. and Toyota Motor Corp. and hurt the economy’s recovery from the March 11 earthquake and tsunami. Finance Minister Jun Azumi said monetary authorities could continue intervening.

The dollar surged about 5 percent to above 79 yen, and Japan’s export sector — whose fortunes are largely tied to the relative strength of the yen — rose abruptly.

Isuzu Motors Corp. jumped 3.7 percent. Canon Inc. rose 1 percent and Nikon Corp. added 1.8 percent. Nintendo Co. gained 1.5 percent.

In Sydney, shares of Australian flag carrier Qantas Airways Ltd. jumped 4.3 percent after a court ordered employees of the world’s 10th-largest airlines back to work. The airline had grounded its entire fleet on Saturday following weeks of strikes by its workers, but an arbitration court on Sunday ordered an end to the strikes and canceled the staff lockout.

Mainland Chinese shares were mixed. The benchmark Shanghai Composite Index snapped a five-session winning streak by falling 0.2 percent to 2,468.25, while the Shenzhen Composite Index added 0.5 percent to 1,040.93.

“Some real estate shares dropped this morning after Premier Wen Jiabao reaffirmed property sales controls would not be eased, but some bigger developers gained since as it could be a good chance for them to beat the competition,” said Hu Yi, an analyst at China Jianyin Investment Securities.

Poly Real Estate, China’s second-largest listed property developer, gained 1.4 percent, while China Vanke, the industry leader, gained 1.1 percent.

Zhejiang Daily Media Group Co. hit the daily limit of 10 percent, extending gains on the Communist Party’s plans to boost cultural industries.

Last week, investors were cheered by the debt crisis deal reached by European leaders. European banks were asked to take a 50 percent loss on their holdings of Greek government bonds. They will also set aside more money to cushion against future losses. Leaders also pledged to expand the European Union’s bailout fund.

But economists caution that many details in the plan still have to be worked out, including the difficult task of deciding who will pay for it.

“With more questions than answers markets will be hungry for further details over coming weeks and until then it is difficult to see risk appetite stretching too far,” analysts at Credit Agricole CIB wrote in a research note.

This week, investors will likely turn their attention to the U.S.

A key jobs report for October, a Federal Reserve policy meeting and Fed Chairman Ben Bernanke’s quarterly news conference are all due.

“This month is going to be another watershed insight into whether we are looking at a low growth environment or something worse,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “To maintain the low growth environment view, the market is going to want to see positive employment growth.”

In currencies, the euro fell to $1.4014 from $1.4170 on Friday in New York. The dollar was at 78.40 yen, up from 75.76 yen.

Benchmark crude for December delivery was down 49 cents at $92.85 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 64 cents to settle at $93.32 in New York on Friday.


AP researcher Fu Ting contributed from Shanghai.

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