World stocks eye ECB, unfazed by Portugal bailout

[April 07, 2011]  BANGKOK (AP) -- World markets took Portugal's bailout plea in their stride Thursday as investors awaited interest rate decisions from major central banks and Japan appeared to gain the upper hand in the struggle to contain a radiation-leaking nuclear plant.

Oil prices hovered near $109 a barrel amid concerns that rising fuel costs could undermine U.S. economic growth and demand for crude. Stocks on Wall Street were headed for a higher opening, with Dow Jones industrial futures up 5 points to 12,362 and S&P 500 futures up less than 1 point to 1,329.50.

European shares were mostly higher in early trading. Britain's FTSE 100 index rose less than 0.1 percent to 6,045.35. Germany's DAX was flat at 7,214.15, and in Paris, the CAC-40 rose 0.2 percent to 4,055.57.

Earlier in Asia, Tokyo's Nikkei 225 index rose less than 0.1 percent to close at 9,590.93, with investors breathing new life into shares of the country's embattled export sector.

Toyota Motor Corp., the world's biggest automaker, gained 0.9 percent and rival Honda Motor Corp. rose 1.1 percent. Electronics giants also bumped upward, including Sony Corp., Canon Inc. and Panasonic Corp.

The economy also got a boost when the Bank of Japan, in a widely expected decision, kept its key interest rate unchanged at near zero and extended emergency loans to financial institutions affected by the earthquake and tsunami crisis. Shares of Mitsubishi UFJ Financial Group Inc., the country's largest bank, were 2.4 percent higher.

Meanwhile, workers at the Fukushima Dai-ichi nuclear power complex in northeast Japan were racing to cool down the plant's reactors, which have been overheating since a mammoth earthquake and tsunami on March 11 knocked the plant offline, spawning the world's worst nuclear disaster since Chernobyl.

On Wednesday, workers registered a rare victory by stopping highly radioactive water from flowing into the Pacific Ocean.

Central banks outside of Japan are also a focus of attention this week.

Already the People's Bank of China has raised its main interest rate for the fourth time since October as it tries to keep a lid on rising inflationary pressures. The European Central Bank is poised to raise interest rates for the first time in nearly three years on Thursday as it, too, frets about inflation.

"It's likely to be an active day in currency markets as the Bank of Japan, Bank of England and European Central Bank all deliver their latest interest rate decisions," said Ben Potter of IG Markets in Melbourne. "What might be of more interest is the accompanying statement, with traders keen to ascertain the likely timing of further policy moves."

The euro hit a 15-month high against the dollar Wednesday on expectations the ECB will hike interest rates. The euro traded as high as $1.4349, its strongest level since January 2010, before scaling back. In Asia on Thursday, the euro dropped to $1.4291. The dollar fetched 85.23 yen, down from 85.40 yen.

Hong Kong's Hang Seng index was marginally down at 24,281.80, while South Korea's Kospi fell 0.2 percent to 2,122.14.

Shares of Samsung Electronics Co. Inc. slid 1.5 percent after the company suffered a sharp fall in first quarter earnings as competition in the tablet computer market and weakness in its liquid crystal display business offset strength in semiconductors.

Australia's S&P/ASX 200 lost 0.1 percent to 4,908.10. Benchmarks in Malaysia and Indonesia were also lower, while shares on mainland China rose. The Shanghai Composite Index rose 0.2 percent 3,007.91. The smaller Shenzhen Composite Index added 0.7 percent 1,271.32.

Investor sentiment was not dramatically shaken after Portugal asked for a bailout to relieve its crushing debt, joining Greece and Ireland by becoming the third nation using the euro common currency to seek outside help amid a bruising financial crisis.

Prime Minister Jose Socrates went on national television Wednesday to announce that Portugal must take international assistance to save its rapidly deteriorating economy, after months of insisting that he would not ask for a bailout.

In the oil markets, the apparent stalemate in Libya, which accounts for a little under 2 percent of the world's daily oil production, kept oil prices high.

Benchmark crude for May delivery was up 14 cents at $108.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 49 cents to settle at $108.83 on Wednesday. It had climbed as high as $109.15 earlier in the day -- the highest since September 2008.

[Associated Press; By PAMELA SAMPSON]

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