Stocks mostly lower as G-20 finance ministers meet

[October 22, 2010]  LONDON (AP) -- World stocks mostly fell Friday as investors waited to see if finance ministers from the leading 20 industrialized and developing countries will be able to calm tensions in the currency markets during a meeting in South Korea.

In Europe, the FTSE 100 index of leading British shares was down 28.47 points, or 0.5 percent, at 5,729.39 while Germany's DAX fell 12.67 points, or 0.2 percent, to 6,598.34. The CAC-40 in France was 8.11 points, or 0.2 percent, lower at 3,870.16.

Wall Street was also poised for a modest retreat at the open later -- Dow futures were down 5 points at 11,078 while the broader Standard & Poor's 500 futures fell less than a point to 1,174.80.

Stocks have been buoyed much of this week by a run of positive U.S. corporate earnings statements, from the likes of Boeing, McDonald's and Goldman Sachs, as well as continuing expectations that the Federal Reserve will be pumping more money into the U.S. economy after its next policy meeting on November 3.

"Right now traders appear to be pausing for breath," said Anthony Grech, head of research at IG Index. "With little fundamental data due for release today, the temptation is probably to start unwinding some risk ahead of the weekend break."

The focus Friday is on the G-20 meeting in South Korea to see if ministers can make progress in resolving tensions over undervalued currencies that give some nations an unfair advantage in export markets. Over recent weeks, the euro has surged against the dollar to multi-month highs above $1.40 while the Bank of Japan has intervened to stem the yen's export-sapping rise.

China in particular is under renewed pressure over its management of the yuan, which the U.S., the European Union and Japan say is kept artificially low.

A proposal by U.S. Treasury Secretary Timothy Geithner for emerging nations to set targets to reduce their vast trade surpluses with the West met with immediate resistance.

According to officials at the summit, Geithner's idea is to establish numerical targets for current account balances, be they surpluses or deficits -- aiming to reduce conflicts over exchange rates by allowing the currencies of trade surplus countries to rise in concert.

Investors remain skeptical that a 'grand bargain' will be achieved.

"No quick fix is expected and the communique is likely to again emphasize the need to avoid disorderly price action and foreign exchange volatility as well as avoiding competitive devaluations," said Neil MacKinnon, global macro strategist at VTB Capital.

Ahead of the meeting, the euro was flat at $1.3920 while the dollar was down 0.2 percent at 81.17 yen, having fallen Thursday to a fresh 15-year low of 80.93 yen.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index gained 50.23 points, or 0.5 percent, to 9,426.71 and South Korea's Kospi added 1.2 percent to 1,897.31.

Australia's S&P/ASX 200 added 0.6 percent to 4,648.20 while Hong Kong's Hang Seng slipped 0.7 percent to 23,480.81.

Elsewhere, China's Shanghai Composite index dropped 0.3 percent to 2,975.04.

Benchmark oil for December delivery was up 26 cents at $80.81 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.98 to settle at $80.56 on Thursday.

[Associated Press; By PAN PYLAS]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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