World markets muted ahead of US jobs report

[June 03, 2011]  BANGKOK (AP) -- World stock markets mostly fell Friday amid more evidence the U.S. economy is sputtering as investors turned their focus to a key monthly jobs report.

Oil prices dropped below $100 a barrel. In currencies, the dollar rose against the euro and was down against the yen after Moody's warned that it might put the U.S. government's credit rating under review for a possible downgrade.

Meanwhile, many investors were girding for the monthly U.S. employment report, which will be released later Friday and show whether the economy's soft patch translated into less hiring in May.

In early European trading, the FTSE 100 index of leading British shares was up 0.2 percent to 5,861.01 while Germany's DAX was up 0.6 percent to 7,116.90. The CAC-40 in France was 0.4 percent higher at 3,903.93.

U.S. stocks were poised to fall. Dow Jones futures were down 0.3 percent at 12,248.55 while S&P 500 futures were down 0.2 percent to 1,309.30.

Japan's Nikkei 225 index was down 0.7 percent to close at 9,492.21. Shares of Sony Corp. fell 0.6 percent after the company launched a probe into claims of another massive data breach.

Hackers claimed to have pulled off what they described as an elementary attack to highlight weaknesses in Sony's security. In Tokyo on Friday, the company said it was looking into the claims but did not elaborate.

Sony Corp. is already facing questions over why it did not inform consumers more quickly after a cyberattack in April targeted credit card information through its PlayStation Network and Sony Online Entertainment network, compromising more than 100 million user accounts worldwide.

Elsewhere, South Korea's Kospi was 0.7 percent lower to end at 2,113.47, while Hong Kong's Hang Seng tumbled 1.3 percent to finish at 22,949.56.

Analysts said a myriad of data pointing to slowing economic conditions globally -- particularly sluggish growth in Chinese manufacturing and a stubborn downturn in real estate and jobs in the U.S. -- is causing pessimism among investors.

First-time applications for U.S. unemployment benefits, an indication of how many people are losing their jobs, fell slightly last week to 422,000. But that was still well above the 375,000 level that signals that the economy is adding jobs.

"Job creation figures in the U.S. were way below expectations. That was the trigger," said Francis Lun, a Hong Kong-based analyst. "That caused the mini-crash this week."

Australia's S&P/ASX 200 index shed 0.4 percent to 4,583.10, with mining shares sustaining more losses as expectations grew of a global economic slowdown that would crimp demand for metals and materials. BHP Billiton, the world's largest mining company, lost 0.7 percent. Rival Rio Tinto fell 0.4 percent. Energy Resources of Australia Ltd. toppled 2.3 percent.

Mainland Chinese shares advanced as investors snapped up bargains following recent selloffs.

The Shanghai Composite Index gained 0.8 percent to 2,728.02 while the Shenzhen Composite Index rose 1.7 percent to 1,124.32.

"Today's gain is technical. Inflation persists and credit tightening moves will continue for sure at least in the second half of the year," said Liu Kan, an analyst at Guoyuan Securities, based in Shanghai. However, I do not think slower economic growth is bad. Actually, at around 8 percent, it is good for China."

China's economy has been growing at a rate of around 10 percent but Beijing has vowed to pursue a more sustainable pace of growth.

Mainland markets will be closed Monday for a national holiday.

On Wall Street on Thursday, weaker than expected sales reports from retailers and the large number of claims for unemployment benefits left stocks with a mixed finish -- and added to worries that the U.S. economic recovery was stalling.

In recent days, economists have sharply reduced their expectations for hiring in May. Nomura Securities now projects a gain of 85,000, down from 175,000 earlier this week. The consulting firm High Frequency Economics cut its estimate to only 50,000, from an earlier target of 200,000.

Those figures are much lower than average job gains of about 230,000 in the past three months, the strongest hiring spree in five years.

Meanwhile, Moody's Investors Service warned that it could downgrade the U.S. government's credit rating if Congress and the Obama administration don't agree to raise the country's borrowing limit. U.S. Treasury Secretary Tim Geithner has told Congress that without an increase in the $14.3 trillion debt limit by Aug. 2, the government will be forced into its first-ever default, with potentially catastrophic results for the economy.

Benchmark oil for July delivery fell 65 cents to $99.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 11 cents to settle at $100.40 on Thursday.

The euro fell to $1.4477 from $1.4482 while the dollar was down to 80.63 yen from 80.84 yen late Thursday in New York.

[Associated Press; By PAMELA SAMPSON]

Researcher Fu Ting in Shanghai contributed.

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