World stocks lower amid valuation concerns

[November 19, 2009]  LONDON (AP) -- World stocks fell Thursday and Wall Street was expected to open lower amid mounting doubts about the pace of the global economic recovery and ahead of more earnings reports from U.S. retailers.

In Europe, the FTSE 100 index of leading British shares was down 33.35 points, or 0.6 percent, to 5,308.78 while Germany's DAX fell 47.92 points, or 0.8 percent, to 5,739.69. The CAC-40 in France was 22.27 points, or 0.6 percent, lower at 3,805.89.

Wall Street was also poised to open lower -- Dow futures were 44 points, or 0.4 percent, lower at 10,360 while the broader Standard & Poor's 500 futures fell 6.8 points, or 0.6 percent, at 1,101.70.

Stock markets have rallied strongly since March's lows as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound, but recent disappointing U.S. housing figures and mixed earnings from some of the country's leading retailers have dented some of the optimism. Many investors think stock valuations are now pricing in too rapid an economic recovery.

"Negative outlooks from the U.S. software sector and unexpectedly disappointing home stats brought worries about the pace of recovery back to the table," said Richard Griffiths, senior equity trader at Spreadex.

The state of household spending in the U.S. is key for recovery -- it accounts for around 70 percent of the nation's economy. Further insights will be looked for in results later from Gap Inc. and Sears Holdings Corp.

"Investors will be particularly interested in the sector in the run-up to the festive season; retailers will soon be finding out whether consumers are willing to reach for their credit cards or whether post-recessionary fears will prevail," said David Jones, chief market strategist at IG Index.

The markets brushed aside the latest more rosy economic forecasts from the Paris-based Organization for Economic Cooperation and Development, even though it more than doubled its estimate for 2010 growth in its 30 member countries -- which include the U.S., Japan and Germany -- to 1.9 percent and raised its 2011 forecast to 2.5 percent.

"Neither of these figures is exceptional which underpins the delicate nature of the present economic recovery," said Jane Foley, research director at Forex.com.

Earlier, Japan's Nikkei 225 stock average lost 127.33 points, or 1.3 percent, to 9,549.47 -- its seventh straight day of decline as investors succumbed to jitters about a possible glut of new bank shares after Mitsubishi UFJ announced plans to raise capital. The bank's shares fell 3.7 percent.

Elsewhere, Hong Kong's Hang Seng fell 197.17 points, or 0.9 percent, to 22,643.16, while Taiwan's benchmark shed 0.1 percent and Indonesia's market was 0.6 percent lower.

Other markets fared better: South Korea's Kospi added 1 percent to lead the region and China's Shanghai index rose 0.5 percent. In Singapore, shares were up 0.6 percent after the city-state reported a second straight quarter of growth as manufacturing and service sectors helped it surface from a deep recession. The economy was seen expanding between 3 percent and 5 percent next year, the government said.

Oil prices hovered above $79 a barrel, with benchmark crude for December delivery down 60 cents to $78.98 a barrel.

Gold prices eased after a strong run saw it top $1,150 per ounce for the first time ever -- they were down $5.10 an ounce, or 0.5 percent, to $1,136.10.

Meanwhile, the dollar fell 0.5 percent to 88.91 but was up against the euro, which was trading 0.7 percent higher at $1.4862.

[Associated Press; By PAN PYLAS]

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

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