World stocks decline after weak US jobs report

[July 11, 2011]  TOKYO (AP) -- World stock markets slid Monday, dragged by global economic angst after an unexpectedly weak U.S. jobs report and surging inflation in China.

Wall Street's sharp drop before the weekend extended to Asia and Europe, where investors digested news that U.S. employers created the fewest number of jobs in nine months. The 18,000 net jobs in created in June were a fraction of what many economists expected and dampened hopes that the economy is improving.

"Economic news in the U.S. was disappointing," said a Barclays Capital report Monday. "The employment report was weaker than expected across the board -- employment, unemployment, hours, and wages all reflected the same worrisome trend."

As trading got under way in Europe, France's CAC 40 was off 1.3 percent at 3,861.08 and Britain's FTSE 100 dropped 0.2 percent to 5,976.79. Germany's DAX shed 0.9 percent to 7,337.62. Wall Street was also set for losses with Dow futures down 0.7 percent at 12,529.

In Asia, Japan's Nikkei 225 stock average lost 0.7 percent to 10,069.53 and Hong Kong's Hang Seng retreated 1.7 percent to 22,347.23. South Korea's Kospi fell 1.1 percent to 2,157.16 while the Shanghai Composite index edged up 0.2 percent to 2,802.69.

Also dragging sentiment was data released Saturday showing China's inflation accelerated to a three-year high in June even as the overheated economy began to cool.

Consumer prices rose 6.4 percent over a year ago, a sharp jump from May's 5.5 percent rate, China's government said Saturday. Communist leaders declared taming prices their priority this year, but they have been frustrated amid inflation's steady rise.

In Australia, the government's new carbon tax proposal battered stocks. The S&P/ASX 200 shed 1.6 percent to 4,582.30.

Prime Minister Julia Gillard unveiled a plan Sunday to force the country's 500 worst polluters to pay 23 Australian dollars ($25) for every ton of carbon dioxide they emit.

Australia's flagship carrier Qantas said Monday the tax will cost it 110 million to 115 million Australian dollars ($118 million to $123 million) for the 2013 financial year and lead to an increase in passenger fares.

Qantas Airways shares tumbled 3.3 percent, and Virgin Blue Australia Holdings fell 2.9 percent.

Another big loser in Australia was Rupert Murdoch's News Corp., which fell more than 5 percent. The 80-year-old CEO arrived in London over the weekend to tackle a phone-hacking crisis that led to the quick demise of his best-selling Sunday tabloid, the News of the World.

In Tokyo, chip-related shares tumbled after Credit Suisse downgraded its rating on Elpida Memory Inc. to "underperform" from "neutral." The issue fell more than 13 percent, while chip equipment maker Tokyo Electron Ltd. slid 2.9 percent.

"PC demand continues to slump, reflecting market saturation in advanced countries, and the severe delay in the Chinese laptop market staging a recovery," Credit Suisse analyst Hideyuki Maekawa said of DRAM chips.

In New York Friday, the Dow Jones industrial average lost 62.29, or 0.5 percent, to 12,657.20.

The Standard and Poor's 500 index fell 9.42 points, or 0.7 percent, to 1,343.80. The tech-heavy Nasdaq composite dropped 12.85, or 0.4 percent, to 2,859.81.

Oil prices fell to below $96 a barrel Monday in Asia amid signs of a struggling U.S. economy.

Benchmark oil for August delivery was down $1.29 to $94.91 a barrel in electronic trading on the New York Mercantile Exchange. Crude gave up $2.47 to settle at $96.20 on Friday.

In London, Brent crude was steady at $118.33 per barrel on the ICE Futures exchange.

The euro was trading at $1.4124. The dollar was changing hands for 80.75 yen.

[Associated Press; By TOMOKO A. HOSAKA]

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