European stocks edge down ahead of key US news

[February 04, 2010]  LONDON (AP) -- European stock markets edged down Wednesday despite modest gains in Asia, as investors remained reluctant to stake out new positions ahead of some key economic news out of the U.S.

The FTSE 100 index of leading British shares was down 23.85 points, or 0.4 percent, at 5,498.65 while Germany's DAX fell 27.13 points, or 0.5 percent, to 6,004.73. The CAC-40 in France was 8.2 points, or 0.2 percent, lower at 4,004.71.

Wall Street was also poised for a subdued opening -- Dow futures were down 29 points, or 0.3 percent, at 10,486 while the broader Standard & Poor's 500 futures fell 4.1 points, or 0.4 percent, 1,128.20.

Since Monday, when investors charged into the New Year in a buoyant mood, trading has been lackluster -- disappointing U.S. housing figures Tuesday dented some of the optimism and U.S. stocks ended more or less flat.

Analysts said this Friday's U.S. nonfarm payrolls data for December could be the catalyst for renewed direction -- the jobs data often set the stock market tone for a week or two.

However, there's some economic news later that could prompt some positioning for Friday's data, including the monthly jobs figures from private payrolls firm ADP. In addition, the monthly services sector survey from the Institute for Supply Management will be pored over to see if it is as buoyant as the equivalent manufacturing report on Monday.

The publication of the minutes to the last rate-setting meeting of the U.S. Federal Reserve could also excite interest as investors try to get a clearer idea about the growing tensions between the doves and the hawks on the Federal Open Market Committee.

Meanwhile in London, Europe's busiest financial center, trading activity was affected by big snowfalls in counties around the capital, where many traders live.

"We have still been plagued by lower volume since the return from the Christmas break and things may be similar today as the big freeze continues to disrupt across Britain," said James Hughes, market analyst at CMC Markets.

"Many will not be able to travel to the city today and this added disruption could further dent volumes and cause a degree of volatility," he added.

Earlier in Asia, Japanese stocks shrugged off speculation the country's finance minister, one of the few experienced hands in the new government's Cabinet, will resign because of ill health. Hirohisa Fujii, 77, checked into hospital on December 28 for rest and health checks.

Japan's Nikkei 225 stock average closed up 49.62 points, or 0.5 percent, at a new 15-month high of 10,731.45.

Hong Kong's Hang Seng added 137.09, or 0.6 percent, to 22,416.67 and South Korea's Kospi climbed 0.9 percent to 1,705.32. Australia's benchmark advanced 0.2 percent and Singapore's market gained 0.2 percent but China's Shanghai index dropped 0.9 percent.

Oil prices hovered below $82 a barrel after a report showed U.S. crude supplies fell more than expected last week. Benchmark crude for February delivery was down 4 cents at $81.73 in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract rose 26 cents to settle at $81.77, a 14-month high.

The dollar recouped most of the previous day's losses against the yen amid the growing talk of Fujii's status, rising 0.8 percent to 92.43 yen.

Though any new finance minister would still face the same deflationary concerns that occupy Fujii, the currency markets are skeptical that any successor could be as effective in resisting calls for a bigger fiscal boost.

"Any suggestion of additional Japanese government bond issuance to fund such fiscal adventures would likely weigh on the yen," said Gareth Berry, a currency strategist at UBS.

The euro was steady at $1.4360.

[Associated Press; By PAN PYLAS]

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