Markets slip after gloomy US economic data

[December 24, 2008]  LONDON (AP) -- World stock markets slipped Wednesday in limited Christmas Eve trade after downbeat data about the U.S. economy and housing sector and more gloomy news about Britain's real estate slump.

Britain's FTSE 100 index fell 1.1 percent to 4,210.10, while France's CAC-40 eased 0.73 percent to 3,105.71. Germany's stock market was closed.

House prices in Britain will fall 10 percent next year as banks rein in lending and buyers are deterred by the economic slowdown, a leading surveyors' group forecast Wednesday. The Royal Institution of Chartered Surveyors said the fall would bring house prices, which have roughly tripled over the last decade, down to at least 25 percent below their summer 2007 peak.

Britain's economy shrank 0.6 percent in the third quarter and economists expect a steep downturn from the global economic slowdown and consequences of the collapse in the house prices and sharply tighter credit.

In Asia, Japan's Nikkei 225 stock average dropped 206.68 points, or 2.4 percent, to 8,517.10, after being closed Tuesday for a holiday.

Shares in Toyota Motor Corp. tumbled 4 percent in their first trading day since Monday, when Japan's biggest automaker said it expected to post its first operating loss in almost 70 years this fiscal year. Wednesday's news that Toyota's global sales plunged almost 22 percent in November added to the sector's gloom, dragging down car companies around Asia.

Hong Kong's Hang Seng Index closed down 0.3 percent to 14,184.14, while South Korea's Kospi lost 1.4 percent 1,128.51. In Europe, Britain's FTSE traded 0.7 percent lower and Frances CAC 40 was off about 0.1 percent in shortened sessions.

"The end-of-the-year, bear-market, feel-good rally is ending sooner than many expected," said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

"Investors are being hit in the face with the reality of just how bad the U.S. economy is and they're seeing firsthand the effects this is having on the consumer and, as a result, companies like Toyota and U.S. retailers," he said.

Elsewhere, Shanghai's benchmark lost 1.8 percent and India's main stock measure lost 1 percent; key indices in Australia, Taiwan and Singapore gained.

Many investors found little reason to buy after reports released overnight in the U.S. showed no signs of a turnaround in the world's largest economy, already in recession. The government said gross domestic product, the broadest measure of the economy, shrank at an annual rate of 0.5 percent in the third quarter.

America's hard-hit housing sector also continued to deteriorate. New home sales weakened last month to the slowest pace in nearly 18 years, while prices of new homes dropped by the biggest amount in eight months. Sales of existing homes weakened.

The sobering news sent Wall Street lower, with the Dow Jones industrial average shedding 100.28 points, or 1.18 percent, to 8,419.49. The Standard & Poor's 500 index fell 8.47 points, or 0.97 percent, to 863.16.

Wall Street futures pointed to a mixed opening on Wednesday, when U.S. markets will close early for the Christmas holiday.

Worries that demand would sink further well into 2009 pulled car companies lower. Honda Motor Co., Japan's No. 2 automaker, plummeted 5.7 percent, while South Korea's Hyundai Motor Co. shed 2.4 percent.

Oil prices dipped, with light, sweet crude for February delivery dipping 45 cents to $38.53 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe.

The dollar sank to 90.46 yen, up from 90.38 the day before; the euro traded slightly higher at $1.3980 from $1.3963 the day before.

Many markets across Asia will be closed Thursday for Christmas, including Hong Kong, Singapore and Australia. Japan's stock market, however, will be open.

[Associated Press; By DAVID McHUGH]

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