World shares down as Japan crisis drags on

[April 05, 2011]  BANGKOK (AP) -- World markets were mostly lower Tuesday as Japan's inability to tame a nuclear crisis led to the drastic decision to dump radioactive water into the sea, and its companies experienced production problems amid supply and power interruptions.

Oil prices hovered above $108 a barrel in Asia as traders mulled whether political uprisings in the Middle East and signs of strong global crude demand justify extending a 30 percent gain since mid-February.

European shares were down in early trading. Britain's FTSE 100 dropped 0.3 percent to 6,000.45 and Germany's DAX was 0.4 percent lower to 7,151.30. France's CAC-40 also headed south, by 0.5 percent to 4,021.29. Wall Street was set to open lower, with Dow Jones industrial futures down 37 points to 12,300 and S&P 500 futures losing 5.3 points to 1,323.90.

Japan's benchmark Nikkei 225 index dropped 1.1 percent to 9,615.55, amid frantic -- and unsuccessful -- efforts to control a radioactive leak at a nuclear plant damaged by a monster earthquake and tsunami that struck off the country's northeastern coast on March 11.

Shares of Tokyo Electric Power Co. Inc., the utility known as TEPCO that operates the plant, have been in a free fall since the disaster, nose-diving a staggering 80 percent. On Tuesday, the stock hit its lowest level in 60 years.

TEPCO's coastal Fukushima Dai-ichi nuclear power complex has been leaking radiation since the quake and tsunami knocked out its crucial cooling systems. The company is now struggling to contain the crisis and has resorted to pumping contaminated water into the Pacific Ocean. The damage, meanwhile, forced the plant to cut its daily power supply in Tokyo and surrounding areas, causing many factories to suspend or limit operations.

Still other companies have limited or stopped production because of supply chain disruptions.

Shares in Japan's powerhouse auto sector skidded downward. Toyota Motor Corp., the world's largest automaker, slid 2.4 percent after the company said Monday it will temporarily shut down all of its North American factories because of parts shortages. The temporary shutdowns are likely to take place later this month, affecting 25,000 workers, but no layoffs are expected, the company said.

Honda Motor Corp. dropped 2.5 percent, and Nissan Motor Corp. slumped 2.2 percent.

"The disruption to Japanese supply chains is beginning to become apparent. Honda is slowing its North American production, but it also announced it will resume homeland production in two weeks," Bank of America Merrill Lynch said in a report, adding that Nissan was cutting output in China by 10 percent.

Elsewhere, South Korea's Kospi index rose 0.7 percent to 2,130.43. Australia's S&P/ASX 200 rose 0.3 percent to 4,899.80. Benchmarks in Singapore and New Zealand were also higher. Key indexes in the Philippines, Thailand and Indonesia dropped. Markets in Hong Kong, mainland China and Taiwan were closed for a public holiday.

The Bank of Japan meets this week and investors will be looking to see if it enacts any further policy measures. The central bank has pumped billions of yen into the economy to keep liquidity flowing through the system. It has also received international support to stem the export-sapping appreciation of the yen following last month's disaster.

Trading volume was light on Wall Street on Monday, with some investors waiting for Alcoa Inc. to report its first quarter earnings next Monday, the unofficial start of the earnings seasons, before making any big moves.

The Dow Jones industrial average gained 0.2 percent to 12,400.03. The S&P 500 rose less than a point to 1,332.87. The Nasdaq composite fell less than a point to 2,789.19.

Benchmark crude for May delivery was down 35 cents to $108.12 in electronic trading on the New York Mercantile Exchange. The contract settled at $108.47 per barrel on Monday, a fresh 30-month high as fighting in Libya and unrest in the Middle East continued to raise doubts about future supplies.

In currencies, the dollar rose to 84.25 yen from 84.04 yen late Monday in New York. The euro fell to $1.4175 from $1.4216.

[Associated Press; By PAMELA SAMPSON]

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