World stocks mostly lower on weak economic data

[October 01, 2009]  LONDON (AP) -- European and Asian stocks were mostly lower Thursday as weak economic data in both regions overshadowed upgraded growth forecasts from the International Monetary Fund.

Britain's FTSE 100 was down 0.2 percent at 5,126.12, Germany's DAX was up 0.1 percent at 5,679.95 and France's CAC-40 was 0.2 percent lower at 3,786.32.

Asian markets were mostly lower, tracking Wall Street's fall on Wednesday and after a Japanese survey showed manufacturers still think they need to lay off workers. U.S. indexes were expected to slide on the open -- Dow industrials futures were down 24 points at 9,629.00 and Standard & Poor's 500 futures were down 2.80 points at 1,050.10.

Economic data out of Europe was mostly gloomy, with the unemployment rate hitting a fresh 10-year high in August at 9.6 percent, up from 9.5 percent in July. Some 15 million people were seeking work in the euro area in August, 165,000 more than in July.

"We doubt that the labor market correction has run its course," wrote Jennifer McKeown, economist at Capital Economics, in a note.

She said that even if unemployment soon stops rising, earlier increases will hurt wage growth.

"In all, then, while the outlook for exports and industry is improving, there is so far little prospect of a strong pick-up in consumer spending growth," said McKeown.

The data was released just as the IMF unveiled its latest World Economic Outlook report, which raised its global growth outlook for 2010 to 3.1 percent from 2.5 percent previously.

The IMF said the world was recovering from the crisis faster than expected, but warned that the improvements were in part due to stimulus measures by governments and central banks and being driven Asia.

Recovery in Europe would be sluggish, in part due to rising unemployment, as highlighted in Thursday's economic figures.

In Asia, economic readings were mixed. Surveys showed Chinese manufacturing was expanding and big manufacturers in Japan were less pessimistic. Yet after making drastic cuts to workers, Japanese companies still say they have too many employees and too much production capacity.

"We're still on the less bad trend, but it's a good time to take some money off the table," said Song Seng Wun, economist at CIMB-GK in Singapore. "After a very decent September, we'll have to regroup and rethink our strategy for the next quarter."

Earlier in Asia, Japan's Nikkei 225 stock average dropped 154.59 points, or 1.5 percent, to 9,978.64 and South Korea's Kospi fell 28.51 points, or 1.7 percent, to 1,644.63.

Indexes in Australia and Singapore were lower, but stocks in Taiwan and Indonesia edged up.

Hong Kong and mainland China markets were closed for the 60th anniversary of Communist rule. Hong Kong reopens Friday but mainland markets are closed until October 9.

On Wednesday in the U.S., the Dow ended down 0.3 percent, the S&P 500 index fell 0.3 percent to 1,057.08 and the Nasdaq fell 0.1 percent to 2,122.42.

Crude oil prices traded lower in European trade, with benchmark crude for November delivery off 51 cents at $70.10. The contract soared $3.90 overnight.

The dollar was higher at 89.99 yen from 89.70 yen. The euro slipped to $1.4576 from $1.4636.

[Associated Press; By CARLO PIOVANO]

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

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