World stock markets mixed ahead of Bernanke speech

[October 15, 2010]  SINGAPORE (AP) -- World stock markets were mixed Friday as investors readied for a speech from the U.S. Federal Reserve chairman that could give insight into plans for boosting the No. 1 economy.

Chinese stocks bucked the lackluster trend with the Shanghai Composite Index vaulting more than 3 percent on expectations that Beijing's upcoming five-year plan will focus on increasing domestic spending power -- a boost for the state-owned companies that dominate the stock market.

Sentiment elsewhere in Asia was damped by the strong yen and by a disappointing jobs report, which added weight to the view high unemployment will continue to drag on an already weak recovery in the world's largest economy. Initial claims for unemployment aid rose by 13,000 to a seasonally adjusted 462,000, the U.S. Labor Department said Thursday.

Investors were also awaiting speech by Fed chairman Ben Bernanke that could give more details of new action to stimulate the U.S. economy. The Fed's next meeting in early November is widely expected to announce measures to shore up growth, including the central bank buying government bonds to lower long-term interest rates.

In early European trading, Germany's DAX was up 0.2 percent at 6,470.76. France's CAC-40 rose 0.2 percent to 3,826.30 while the FTSE 100 index of leading British shares was down 0.2 percent at 5,714.19.

Wall Street was set to fall slightly. Dow futures were off 3 points at 11,049.00 and broader S&P futures slipped 0.3 point to 1,173.20.

Japan's benchmark Nikkei 225 stock average lost 83.26 points, or 0.9 percent, to 9,500.29 after jumping almost 2 percent the previous day. Exporters lost ground amid ongoing anxiety about the strong yen, which hit another 15-year high against the dollar Thursday.

China's benchmark index in Shanghai surged 3.2 percent to 2,971.16. Industrial & Commercial Bank of China Ltd., or ICBC, climbed 6.6 percent. China Vanke Co., the nation's biggest property developer, added 1.6 percent.

"State-owned market heavyweights led the rise as investors believe in their good profitability in the long-term," said Wei Daoke, an analyst at Shenyin & Wanguo Securities, in Shanghai.

Hong Kong's Hang Seng index fell 0.4 percent to 23,757.63 and Australia's S&P/ASX 200 closed down 0.2 percent at 4,689.00.

Elsewhere, Seoul's Kospi rose 0.1 percent to 1,902.29 and Singapore's stock gauge added 0.5 percent to 3,211.27. Benchmarks in Taiwan, India, Malaysia and Indonesia dropped.

Some economists are optimistic that growing consumer demand will help Asia maintain strong economic growth rates and offset a sluggish recovery in developed economies.

"Easy money and sound fundamentals are supercharging domestic demand in Asia, helping the region to ride out the impending weakness in exports to the West," HSBC said in a report.

But others are concerned the region may have to contend with too much of a good thing as a tide of foreign cash threatens to spark asset bubbles and inflation. China's foreign reserves grew $194 billion to $2.7 trillion in the third quarter from the second, the largest jump in a decade.

"With expectation of prolonged low rates in advanced nations, Asian central banks will face growing risk of excessive capital inflows as investors seek higher returns in faster growing Asian countries," Citigroup said.

The Dow Jones industrial average ended Thursday down 1.51 points at 11,094.57. The market made up earlier losses as investors anticipated that the Federal Reserve will take steps soon to strengthen the U.S. economy.

The broader Standard & Poor's 500 index fell 4.29, or 0.36 percent, to 1,173.81. The Nasdaq composite index fell 5.85, or 0.2 percent, to 2,435.38.

In currencies, the dollar slipped to 81.14 yen from 81.56 late Thursday in New York. The euro rose to $1.4108 from $1.4038.

Benchmark crude for November delivery was down 1 cent at $82.68 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 32 cents to settle at $82.69 a barrel on Thursday..

[Associated Press; By ALEX KENNEDY]

AP researcher Ji Chen in Shanghai contributed

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