World shares mixed amid worries about Middle East

[February 21, 2011]  BANGKOK (AP) -- World stock markets were mixed Monday, with investor on edge as political unrest in the Arab world spread to OPEC member Libya while oil stocks helped some benchmarks advance.

Crude prices jumped above $88 a barrel amid investor concern that the violent protests rocking Libya could disrupt its oil supplies. In currencies, the dollar weakened against the yen and the euro.

European bourses slumped, then rebounded, in early trading. Britain's FTSE 100 rose 0.4 percent to 6,104.37. Germany's DAX was up 0.1 percent to 7,435.90 while the CAC-40 in Paris fell 0.1 percent to 4,153.15. Markets in the U.S. are closed for a holiday.

Japan's Nikkei 225 stock average rose 0.1 percent to 10,857.53 with the index enjoying a six-day winning streak to close at a 10-month high. Inpex, Japan's largest energy explorer, gained 1.7 percent -- in line with higher oil prices and investors leaning toward commodities over equities during times of uncertainty.

Sentiment was tempered, though, by a move Friday by China to control inflation. Beijing ordered its banks to hold back more money as reserves, raising the required level by 0.5 percent of deposits. Reserves vary by institution but are about 20 percent for China's biggest state-owned lenders.

Hong Kong's Hang Seng index lost 0.4 percent to 23,508.62, although oil companies helped stem losses. State-owned oil company CNOOC Ltd. rose 1.7 percent and PetroChina Ltd., China's biggest oil and gas producer, was up 0.9 percent.

South Korea's Kospi fell 0.4 percent to 2,005.30 and Australia's S&P/ASX 200 shed 0.7 percent to 4,900.

Benchmarks in Taiwan, Singapore and New Zealand also retreated.

Shares of Australian resource companies, which rely heavily on growing Chinese demand, slumped in response to China's latest reserve requirement hike. BHP Billiton Ltd. fell 1.5 percent. Rival Rio Tinto Ltd. lost 1.7 percent. Japanese stocks also sensitive to Chinese demand dropped, including Komatsu Ltd., a maker of construction equipment, by 0.4 percent, and Hitachi Construction, down 0.9 percent.

But mainland Chinese shares shrugged off the central bank's move, buoyed by gains in heavyweight oil company shares following an increase in Chinese fuel prices over the weekend. The benchmark Shanghai Composite Index gained 1.1 percent to 2,932.25. The Shenzhen Composite Index gained 1.9 percent to 1,297.66.

A vow by a top leader, Wang Qishan, to build up China's already thriving tourism industry drove a rally in travel shares. Travel operator Emeishan Tourism Co. hit the upside daily limit of 10 percent.

"The plan is a way of stimulating domestic demand and promoting economic growth," said Peng Yunliang, an analyst at Shanghai Securities.

While analysts kept an eye on Mideast unrest, they noted that Asian markets had performed well recently and were perhaps due for some profit-taking.

"I think the focus is on the nervousness in the Middle East with the potential disruption to oil supplies. The markets have been pretty volatile in the past few weeks because of this added geopolitical uncertainty, but Asian equities had a pretty good bounce last week, so maybe this is a little correction to that," said David Cohen, economist at Action Economics in Singapore.

On Sunday, Moammar Gadhafi's son went on state television in Libya to proclaim that his father remained in charge with the army's backing. Seif al-Islam Gadhafi, in the regime's first comments on the six days of anti-government demonstrations, also warned protesters that they risked igniting a civil war in which Libya's oil wealth "will be burned."

Libya's response has been the harshest of any Arab country that has been wracked by the protests that toppled long-serving leaders in neighboring Tunisia and Egypt. The instability has pushed oil prices higher amid worries of supply disruptions.

Markets in the U.S. will be closed Monday for the Presidents Day holiday. Germany's Ifo institute was to release its monthly index of business confidence, a closely watched indicator for Europe's biggest economy.

In currencies, the dollar was down to 83.14 yen from 83.16 yen late Friday. The euro rose to $1.3696 from $1.3690.

Benchmark crude for March delivery was up $2.17 at $88.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to settle at $86.20 on Friday.

[Associated Press; By PAMELA SAMPSON]

AP researcher Fu Ting contributed from Shanghai.

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