World stocks fall amid renewed Europe bank worries

[September 07, 2010]  LONDON (AP) -- World stock markets fell Tuesday, particularly in Europe, where concerns about the health of banks resurfaced and EU finance ministers met to consider a new levy on lenders.

A report in the Wall Street Journal claimed the EU stress tests of 91 banks in July understated some lenders' holdings of potentially risky debt. Meanwhile, the Financial Times said Germany's top ten banks will have to raise as much as euro105 billion ($135 billion) to meet new capital requirements.

With little in the way of economic indicators to otherwise direct traders, markets slipped. By midmorning in Europe, Britain's FTSE 100 index was 0.7 percent lower at 5,402.66 and Germany's DAX was down 0.6 percent at 6,116.46. France's CAC-40 shed 1.0 percent to 3,649.12.

Losses in Asia were more modest as worries eased about the pace of the global economic recovery following U.S. jobs figures that weren't as dire as feared. Investors were also waiting to see how U.S. markets -- which were closed for a public holiday Monday -- react to President Barack Obama's new $50 billion jobs program.

Wall Street was expected to slide on the open -- Dow industrials futures were 0.5 percent lower at 10,380 and Standard & Poor's 500 futures were down 0.4 percent at 1,098.70.

Attention will turn to Brussels, where European Union finance ministers are gathered to discuss a bank levy and a tax on financial transactions.

Although economic indicators have improved since their last meeting in July, governments recognize the recovery will be fragile and uneven.

"We are certainly not out of the woods yet," said Olli Rehn, European Commissioner for Economic and Monetary Affairs.

In Asia, Japan's benchmark Nikkei 225 stock index declined 75.32 points, or 0.8 percent, to 9,226.00 amid continued strength in the yen, which eats into profits of the country's crucial exporters. Japan's central bank voted Tuesday to keep interest rates near zero, holding off on further measures to tackle a strong yen that is undermining a fragile economic recovery.

Hong Kong's Hang Seng added 0.2 percent to 21,401.79 while South Korea's Kospi edged lower by 0.3 percent to 1,787.74. Australia's S&P/ASX 200 fell 0.1 percent to 4,573.20.

Markets in Singapore, Taiwan and Malaysia also fell while India and Indonesia gained.

In currencies, the dollar slipped to 83.95 yen in Tokyo from 84.11 yen in London. The euro declined to $1.2766 from $1.2833.

Benchmark crude for October delivery was down $1.21 at $73.39 a barrel in electronic trading on the New York Mercantile Exchange.

[Associated Press; By CARLO PIOVANO]

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