World stocks slip on earnings woes; India soars

[May 18, 2009]  LONDON (AP) -- World stock markets were mostly lower Monday as weak company earnings in Asia dented investors' hopes for a global economic recovery, although India's index vaulted 17 percent after investors saw election results as paving the way for economic reforms.

European stocks followed most Asian markets lower after two of Japan's leading companies -- Panasonic and Mizuho Financial -- reported colossal losses for the last fiscal year.

India provided a bright spot, however, its shares surging in early trade as results of national elections boosted confidence about the government's stability and ability to enact long-awaited reforms.

In morning European trading, Germany's DAX was down 1.1 percent at 4,684.80 and Britain's FTSE 100 was 0.2 percent lower at 4,338.62. France's CAC 40 fell 1.0 percent to 3,137.85.

Europe took its cue mostly from Japan, where the Nikkei 225 closed down 2.4 percent at 9,038.69, and as markets found little to bolster hopes that the worst of the global recession is over.

Analysts said investors are juggling weak backward-looking economic indicators -- such as Friday's release of a sharp drop in European economic activity -- with more forward-looking measures of business and consumer confidence, which have been on the rise.

"The rally in equity markets during March and April may hint that the optimists have won, but the fact that this has now petered out instead suggests that we have merely removed the extreme pessimism from the market," said Daragh Maher, deputy head of global forex strategy at Calyon.

Tuesday's ZEW index of German business sentiment will be watched closely for more gains, particularly after Friday's news that Europe's largest economy shrank by a stunning 3.8 percent in the first quarter.

The corporate data out of Asia was a reminder of the difficulties companies are still in. Shares in electronics giant Panasonic plummeted 7.6 percent after the firm announced late Friday a 378.96 billion yen ($4 billion) full-year loss and projected a steeper-than-expected net loss for the coming year.

Among banks, Mizuho Financial Group Inc., Japan's second-largest lender, shed 3.8 percent after posting a group net loss of 588.8 billion yen ($6.2 billion).

The rally in stock markets since early March has brought several indexes to positive territory year-to-date, but analysts say any more gains would require a real rebound in economic growth and corporate profits, not just slower declines.

"We need to see more signs of demand actually picking up and the economy improving. Without that, we're going to trade in a range or see more selling," said Yoji Takeda, who helps manage $1 billion in assets at RBC Investment Management in Hong Kong.

Bucking Monday's downward trend, India's benchmark Sensex soared a stunning 17.3 percent, forcing trading to be halted for the day, amid euphoria over the Congress Party's definitive victory in national elections. Markets are hoping that the new government would be more effective in leading the country through the global economic downturn and return it to growth.

Elsewhere, Hong Kong's Hang Seng recovered early losses to gain 232.21, or 1.4 percent, to 17,022.91, while South Korea's benchmark shed 0.4 percent to 1,386.68. Shanghai's index rose 0.3 percent and Australia's stock measure was off 1 percent.

U.S. futures pointed to more losses on Wall Street Monday. Dow Jones industrial average futures were down 14 points to 8,253 and Standard & Poor's 500 futures were 0.9 points lower at 882.10.

On Friday the Dow fell 62.68 points, or 0.8 percent, to 8,268.64, while the broader Standard & Poor's 500 index fell 10.19 points, or 1.1 percent, to 882.88.

Oil prices hovered Monday around $57 a barrel in Asia as traders backed off last week's push to above $60 amid signs of weak crude demand. Benchmark crude for June delivery was up 56 cents to $56.90. The contract dropped $2.28 on Friday.

In currencies, the dollar was somewhat higher against the Japanese yen, at 95.78 yen from 95.26 yen late Friday. The euro slid to $1.3449 from $1.3493.

[Associated Press; By CARLO PIOVANO]

Associated Press writer Jeremiah Marquez in Hong Kong contributed to this report.

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