World stocks steady ahead of US growth figures

[December 22, 2010]  LONDON (AP) -- Global stocks rose modestly Wednesday ahead of the latest estimate of U.S. economic growth in the third quarter, potentially the final market moving release before traders pack up for the Christmas break.

In Europe, the FTSE 100 index of leading British shares was up 11.60 points, or 0.2 percent, at 5,963.40 while Germany's DAX rose around 2 points to 7,079.68. The CAC-40 in France was up about a point at 3,938.08.

Wall Street was poised for a fairly flat opening, with Dow futures down 2 points at 11,469 while the broader Standard & Poor's 500 futures were unchanged at 1,250.70.

How U.S. stocks open could well hinge on how much growth figures for the world's largest economy are revised up for the July-September quarter. On Tuesday, the S&P closed at its highest level since the trading day before Lehman Brothers collapsed in September 2008, while the Dow ended at its highest since August 2008.

There are hopes that the previous estimate of 2.5 percent annualized growth could be revised up to 2.8 percent following a run of stronger-than-anticipated data. There will also be interest in existing home sales figures for November, which will be released after the bell.

"The latter will remain at a low level by historical standards but in a jobbing market, a 6 percent bounce will not go unnoticed," said Daragh Maher, an analyst at Credit Agricole.

Optimism about the pace of the U.S. economic recovery has increased over the past few weeks, partly because of the stronger data but also in the wake of a deal to extend tax cuts.

Analysts said the data could give the dollar a fillip after broad declines on Wednesday -- by mid morning London time, the euro was up 0.5 percent at $1.3163.

Though the focus will likely be on the U.S., there are still nagging concerns over the European debt crisis after further warnings from credit rating agencies.

On Tuesday, Moody's Investor Services warned that Portugal may have its rating cut in coming months, while rival Fitch indicated that it may slash its rating on bailed-out Greece to so-called junk status by the end of January. Standard & Poor's and Moody's have already cut their rating on Greece to non-investment grade.

"The moves add to the sense of deterioration in the eurozone and fuel further speculation about possible outcomes to the crisis," said Robert Ryan, an analyst at BNP Paribas . "Investors do not like uncertainty and this will continue to weigh on the euro."

Elsewhere, news that the British economy grew by a slightly less than anticipated quarterly rate of 0.7 percent during the third quarter had little market impact partly because the minutes to the last policy meeting at the Bank of England came across as modestly more hawkish than expected as rate-setters voiced worries over above-target inflation.

Earlier in Asia, Chinese shares fell on profit-taking, with the benchmark Shanghai Composite Index losing 0.9 percent to 2,877.90. The Shenzhen Composite Index for China's smaller, second market slipped 0.8 percent to 1,338.20.

Japan's Nikkei 225 stock average closed down 0.2 percent to close at 10,346.48 after being higher for most of the day.

Hong Kong's Hang Seng index rose 0.2 percent to finish at 23,045.19, South Korea's Kospi advanced less than 0.1 percent to end at 2,038.11 and Australia's S&P/ASX 200 added 0.1 percent to close 4,778.40.

Benchmark oil for February delivery rose 51 cents to $90.33 in electronic trading on the New York Mercantile Exchange. The contract rose 45 cents to settle at $89.82 on Tuesday.

[Associated Press; By PAN PYLAS]

AP Business Writer Kelvin Chan in Hong Kong contributed to this report.

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