World stocks mixed as growth doubts mount

[June 30, 2010]  MILAN (AP) -- European markets edged higher in volatile trading Wednesday a day after logging steep losses, while major Asian indexes closed down on worries that the U.S. and Chinese economies are slowing down.

European stocks were buoyed by news that Germany's unemployment rate declined to 7.5 percent in June thanks to an improving economy and a traditional springtime upturn. The unadjusted jobless rate was down from 7.7 percent in May.

The FTSE 100 index of leading British shares was up 0.42 percent to 4,934.73. Germany's DAX was higher by 0.5 percent to 5,955.15 and France's CAC-40 was up by 0.17 percent to 3,438.92.

Wall Street also appeared ready for a reversal, with Dow futures up 53 points, or 0.5 percent, to 9,850 and Standard & Poor's 500 futures ahead by 5.5 points, or 0.5 percent, to 1,040.40.

The German data raised hopes that consumer spending in Europe's biggest economy could help the region, where severe spending cuts have darkened the outlook.

However, a rate-setting member at the Bank of England warned Wednesday that austerity measures could push the British economy back into recession.

The mixed signals have kept investors on edge, although corporate news was mostly upbeat.

AstraZeneca's shares were up 8.7 percent in London after it won a U.S. court ruling protecting a patent for its blockbuster cholesterol drug, Crestor. Portugal Telecom shares were up 5.4 percent after Spain's Telefonica raised its bid for a stake in a jointly-owened unit.

In Asia, major indexes closed down as concerns lingered about Chinese growth and lower-than-expected U.S. confidence for June all weighed during Tuesday trading as the trading year hit the mid-year point.

The second straight day of losses in Asia came after Wall Street slid overnight on news that U.S. consumer confidence dived in June, a worrisome sign for an economy driven by the spending of ordinary Americans.

The dour news about the world's largest economy kept alarmed investors on the sidelines.

"Most investors are quite cautious and not willing to put their money back into the market," said Castor Pang, director of research at Cinda International in Hong Kong.

He said a possible slowdown in China's growth is also unnerving markets. Earlier this week, investor concern was heightened after an index that forecasts economic activity for China was revised lower.

While traders are seeing economic trouble wherever they look, Pang said he believes the market slide could be somewhat of an overreaction.

"The U.S. economy may not have bottomed out yet, but it has stabilized in the near term," Pang said. "Maybe the U.S. markets are overreacting a little."

But the U.S. and China are not alone in showing signs of stuttering recoveries.

Japan on Tuesday reported that moderating export demand had dented factory output in May while household spending fell and the jobless rate rose. Europe, meanwhile, is being rocked by protests against austerity measures meant to stabilize shaky government finances.

Japan's Nikkei 225 stock average shed 188.03 points, or 2 percent, to close at 9,382.64 and Hong Kong's Hang Seng dropped 0.6 percent to 20,128.99.

South Korea's Kospi lost 0.6 percent to 1,698.29, Australia's S&P/ASX 200 retreated 1 percent to 4,301.5, and Taiwan's benchmark was down 1.3 percent at 7,329.37.

In New York on Tuesday, the Dow Jones industrials fell 2.7 percent to 9,870.30, its lowest close since June 9.The benchmark Standard & Poor's 500 index dropped 3.1 percent to its lowest close since October.

Sentiment wilted on news that U.S. consumer confidence fell sharply this month because of worries about jobs and the overall economy. The Conference Board's Consumer Confidence Index fell to 52.9 from a revised 62.7 in May, marking the steepest drop since February. Investors are also anxious as they wait for the U.S. Labor Department's monthly employment report on Friday.

In currencies, the dollar rose to 88.64 yen from 88.49 yen late Tuesday. The euro gained to $1.2216 from $1.2184.

Benchmark crude for August delivery was up 21 cents to $76.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.31, or 3 percent, to settle at $75.94 on Tuesday.

[Associated Press; By COLLEEN BARRY]

AP writer Pamela Sampson contributed to this report from Bangkok.

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