European stocks fall ahead of US retail sales data

[July 14, 2010]  LONDON (AP) -- European stock markets fell modestly Wednesday ahead of key U.S. retail sales data due later. Asian markets, which were catching up with a global rally the previous day, closed higher after Intel Corp. posted strong sales figures and Singapore said economic growth was stronger than anticipated.

In Europe, the FTSE 100 index of leading British shares was down 22.23 points, or 0.4 percent, at 5,248.79 while Germany's DAX fell 7.66 points, or 0.1 percent, at 6,183.47. The CAC-40 in France was 13.16 points, or 0.4 percent, lower at 3,624.60.

Wall Street was poised for modest gains -- Dow futures were up 48 points, or 0.5 percent, at 10,336 while the broader Standard & Poor's 500 futures rose 5.4 points, or 0.5 percent, at 1,085.10.

The rest of the day's trading could well hinge on U.S. government retail data for June. The figures are particularly important because they shine a light on the state of consumption in the United States , a key driver of growth. The US retail spending accounts for around 70 percent of the world's largest economy.

"Intel's earnings and exceptionally strong Singapore GDP data underpinned equity markets first thing but there is scope for disappointment if today's U.S. retail sales numbers feature more consumer belt-tightening," said Neil Mackinnon, global macro strategist at VTB Capital.

The consensus in the markets is that retail sales fell by 0.2 percent on a monthly basis and by 0.1 percent when auto sales are stripped out.

Sentiment in Europe early on was buoyed by the news that Intel, the world's biggest chipmaker, posted net income of $2.89 billion, or 51 cents per share, in the quarter ended June 26. Analysts expected 43 cents per share. The last time Intel's quarterly net income topped $2.5 billion was in 2000 during the dot-com heyday, when Internet fever fueled spectacular computer sales.

Intel's results and buoyant growth figures in Singapore helped Asian markets close higher and catch up on the previous day's gains in Europe and the U.S., where investors cheered solid earnings from U.S. aluminum company Alcoa Inc., which traditionally kicks off the quarterly earnings reporting season in the U.S.

Japan's Nikkei 225 stock average climbed 258.01 points, or 2.7 percent, to close at 9,795.24 -- shrugging off concerns that the ruling party's loss of its upper house majority will slow economic reforms.

Hong Kong's Hang Seng rose 0.6 percent to 20,560.81 and South Korea's Kospi added 1.3 percent to 1,758.01. Higher metals prices and data showing rising consumer confidence pushed Australia's S&P/ASX 200 up 1.9 percent to 4,462.40.

More good economic news came out of Singapore, which raised its forecast for economic growth this year to a range of 13 percent to 15 percent from the previous forecast of 7 percent to 9 percent. It also raised its forecast for export growth as global demand has stayed strong amid Europe's debt and fiscal crisis.

Singapore, which has the highest percentage of millionaires in the world, is often seen as a barometer of world demand because its economy -- built on manufacturing and services like finance -- is one of the most export-reliant in Asia.

Singapore's benchmark was up 0.7 percent to 2,949.49 and the Shanghai Composite Index gained 0.8 percent to 2,470.44. Markets in Taiwan, Indonesia, New Zealand and Malaysia also rose.

Oil prices hovered above $77 a barrel after a report showed U.S. crude supplies rose unexpectedly last week, suggesting demand for fuel remains tepid. Benchmark crude for August delivery was down 39 cents to $76.76 a barrel in electronic trading on the New York Mercantile Exchange

Trading was fairly flat in the currency markets, with the dollar down 0.1 percent at 88.62 yen and the euro 0.1 percent lower at $1.2706.

[Associated Press; By PAN PYLAS]

Associated Press Writer Pamela Sampson in Bangkok contributed to this report.

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