World markets pause after G-20-fueled rally

[April 03, 2009]  LONDON (AP) -- World stock markets lost steam on Friday, as the previous day's rally -- helped by world leaders' pledge to help world economies with new funds -- gave way to caution ahead of a crucial U.S. jobs report later in the day.

In European morning trading, Britain's FTSE 100 was down 0.2 percent to 4,118.98, Germany's DAX rose 0.5 percent to 4,404.43, and France's CAC 40 slipped 0.1 percent to 2,990.49.

Asian markets climbed modestly on the back of Thursday's announcement by the world's major powers to make available more than $1 trillion to combat the global economic crisis and after China's hard-hit factories showed signs of life.

But gains were somewhat subdued as investors became cautious before a key U.S. employment report -- expected to show massive job losses -- draining momentum from a spectacular rally that lifted stock indexes across the world by double-digit percentages over the last four weeks.

The U.S. Labor Department is due to release a report at 1230 GMT expected to show that a net total of 654,000 jobs were lost last month. If economists are right, it would mark a record four straight months that job losses topped 600,000.

With employers axing payrolls, the U.S. unemployment rate is expected to jump to 8.5 percent, from 8.1 percent in February. If that happens, it would mark the highest jobless rate since late 1983, when the country was recovering from a severe recession that drove unemployment past 10 percent.

Wall Street pointed to a flat open. Dow Jones Industrial Average futures rose 0.2 percent to 7,971 and Standard & Poor's 500 futures climbed 0.3 percent to 837.90.

After meeting Thursday, the Group of 20 industrial and developing nations promised $1.1 trillion to the International Monetary Fund and other development bodies to lend to struggling countries reeling from the global economic turmoil. They also vowed new efforts to clean up banks' tattered balance sheets, shut down tax havens and tighten financial regulations.

Investors, their expectations for any meaningful progress low, cheered the moves -- the latest as governments everywhere bring unprecedented resources to bear against the worst economic slump since the Great Depression.

"There was a fear at the G-20 was going to turn out to be damp squid and it appears instead there was some unity and progress," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong.

After the FTSE, DAC and CAC 40 surged 4.3 percent, 6.1 percent and 5.4 percent Thursday, some clawback was to be expected.

"We're seeing a large degree of profit-taking this morning," said Gary Thomson, head of sales trading at CMC Markets in London. "In the last three sessions of the FTSE it's gone up 10 percent and we're coming up to the notoriously quiet Easter period when people take time off and volumes go down.

"On top of that we have got big figures such as the non-farm payroll data this afternoon. A couple of traders I've been speaking to are looking to ease their positions ahead of that because they fear it will drive the markets lower."

In Asia, figures showing Chinese manufacturing expanded slightly in March for the first time in six months boosted sentiment. The data supported hopes the Chinese economy -- the world's third-largest and a key source of demand for other Asian countries -- is nearing a bottom.

Japan's Nikkei 225 stock average added 30.06 points, or 0.3 percent, to 8,749.84, but traded well off its highs. Hong Kong's Hang Seng edged up 23.72, or 0.2 percent, to 14,545.69. South Korea's Kospi rose 0.5 percent to 1,283.75.

Stock measures in Australia, Taiwan and Singapore gained about 1 percent or more. But Shanghai's key index, after trading in the green, closed down 0.2 percent.

Overnight in New York, Wall Street's buying spree showed no signs of slowing as investors took comfort in an accounting rule change that will help banks pare their massive losses on bad assets.

Sentiment got a further boost from still more positive U.S. economic data, this time highlighting a large increase in factory orders in February. That followed better-than-expected readings on pending home sales, manufacturing activity and auto sales the day before.

The Dow Jones industrial average gained 216.48, or 2.8 percent, to close at 7,978.08, posting its best four weeks since 1933. Broader market indicators also rose sharply, with the Standard & Poor's 500 index up 23.30, or 2.9 percent, to 834.38.

Oil rose above $53 a barrel in Europe. Benchmark crude for May delivery added 55 cents to $53.19. The contract rose $4.25 overnight to settle at $52.64.

[Associated Press; By LOUISE WATT]

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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