World markets await Goldman Sachs earnings

[July 20, 2010]  LONDON (AP) -- European stock markets were little changed Tuesday as investors awaited earnings from U.S. banking giant Goldman Sachs later, while Japanese shares were hit hard by mounting concerns that a rising yen will hurt exports.

In Europe, the FTSE 100 index of leading British shares was up 3.48 points, or 0.1 percent, at 5,151.76 while Germany's DAX fell 3.53 points, or 0.1 percent, to 6,005.58. The CAC-40 in France was about a point higher at 3,487.42.

Wall Street was poised for a modest retreat -- Dow futures were down 19 points, or 0.2 percent, at 10,041 while the broader Standard & Poor's 500 futures fell 3.8 points, or 0.4 percent, to 1,060.

The focus later will be on a raft of U.S. earnings statements. Goldman Sachs Group Inc. and healthcare products company Johnson & Johnson report before the U.S. markets open, while Apple Inc. and Yahoo Inc. are due to unveil their results after the close.

Goldman's figures will be particularly interesting as it was downbeat revenues from Bank of America Corp. and Citigroup Inc. last Friday that prompted steep losses on Wall Street.

"Any disappointment in the banking sector could send another wave of jitters through the market," said Ben Potter, market strategist at IG Index.

Earlier in Asia, most stock markets advanced, with Hong Kong's Hang Seng index up 0.9 percent at 20,264.59 and mainland China's Shanghai index spiked 2.2 percent at 2,528.73 amid expectations Beijing will moderate its efforts to cool the world's No. 3 economy.

"Relief is coming from signs that the Chinese authorities will not introduce further tightening measures in the housing market for the time being, while the slowing from the heightened pace of the first half of the year to a more sustainable level is seen as a positive development in the rebalancing of the Chinese economy," said Ian Stannard, an analyst at BNP Paribas.

However, Japanese shares retreated 1.2 percent to 9,300.46 following a three-day weekend as investors continued to fret about the implication on exports from the big rise of the yen against the dollar over recent weeks. A higher yen will make Japan's exports more expensive, all other things being equal, in the American marketplace.

The dollar has been hamstrung over recent weeks by a raft of disappointing data, which have reined in market expectations of any imminent increase in U.S. borrowing costs.

Michael Hewson, an analyst at CMC Markets, said the risk is that the dollar could soon fall below last year's yen low of 84.80, which would open up the potential for a move down to lows not seen since 1995.

"This would present the Bank of Japan with a decision of whether or not to intervene in the markets, something they haven't done since 2004, to weaken the yen as their exporters become less competitive," said Hewson.

By late-morning London time, the dollar was unchanged at 86.75 yen while the euro was down 0.1 percent at $1.2930.

The euro has managed to brush aside a credit downgrade of Ireland and worries that this Friday's stress tests of EU banks will not be as stringent as many investors hope.

Benchmark crude for August delivery was up 36 cents at $76.90 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 53 cents to settle at $76.54 on Monday.

[Associated Press; By PAN PYLAS]

AP researcher Bonnie Cao in Beijing contributed to this report.

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