World shares down as Japan crisis defies control

[March 29, 2011]  LONDON (AP) -- World stocks fell Tuesday on more bad news from Japan, where authorities raced to stop a radiation leak from a nuclear power plant damaged in an earthquake nearly three weeks ago.

Oil prices, meanwhile, extended losses below $104 a barrel as Libyan rebels gained ground against the forces of Moammar Gadhafi and vowed to restart crude exports from the OPEC nation.

Sentiment in markets remained fragile as traders followed developments at Japan's Fukushima Dai-ichi power plant, from which highly toxic plutonium has leaked, suggesting the fallout may be worse than previously expected.

The plant was crippled when a towering tsunami -- spawned by the biggest earthquake ever to strike Japan -- barreled into it on March 11. The Japanese government conceded it has struggled to stabilize the reactor.

After losses across most of Asia, European indexes also dropped.

Britain's FTSE was 0.3 percent lower to 5,889.30, Germany's DAX dropped 0.8 percent to 6,885.28 and France's CAC-40 was 0.5 percent lower at 3,955.33.

Wall Street, however, was expected to edge up on the open after losses the previous day and in anticipation of crucial U.S. jobs and manufacturing reports later in the week. Dow Jones industrial futures were up 41 points to 12,155 and S&P 500 futures 2.2 points higher to 1,304.40.

Ben Potter, market strategist with IG Markets in Melbourne, said a new catalyst was needed to spur buying and the U.S. economic indicators this week may serve that purpose.

"This may come in the form of continuing upbeat data out of the U.S., potentially starting this Friday with the non-farm payrolls report. The upcoming Q1 earnings season in the U.S. could also be a major catalyst if reports beat street expectations," Potter said.

The U.S. nonfarm payrolls report, due Friday, often sets the market tone for days and is of particular interest amid signs that the Federal Reserve is gauging when to tighten its super-loose monetary policy.

The euro rose to $1.4111 from $1.4097 despite the debt crisis that appears increasingly likely to push Portugal into requiring a bailout. The country is unlikely to have a government before June, when it has a large bond repayment due.

The uncertainty over how Portugal will manage that bond repayment -- raise cash at exorbitant market rates, default or take a bailout just in time -- has kept the crisis brewing.

Bank stress tests in Ireland, meanwhile, are due Thursday and will be closely watched for developments in that country's own market turmoil. Ireland is unable to cope with the massive losses at its banking sector, the size of which is due to be revealed in Thursday's tests. The government is trying to get private creditors to take on some of the losses or ease its bailout terms, though no deals have yet been reached.

In Asia, Japan's benchmark Nikkei 225 index closed down 0.2 percent at 9,459.08. Shares in Japanese companies expecting to play a major role in rebuilding the country's quake-shattered northeast drooped as the government remained preoccupied with the nuclear crisis. Nishimatsu Construction Co. Ltd. plunged 3 percent and Hitachi Construction Machinery Co. Ltd. was down 1.7 percent.

China's Shanghai Composite Index slipped 0.9 percent to 2,958.08 and Hong Kong's Hang Seng index was narrowly down to 23,060.36.

South Korea's Kospi was 0.8 percent higher to 2,072.13. Australia's S&P/ASX 200 gained 0.5 percent to 4,755.80 in light trading. Energy Resources of Australia Ltd., which produces uranium, dropped 3.7 percent amid fears Japan's nuclear crisis will reduce demand for the radioactive element used in nuclear fuel and weapons.

Benchmark crude for May delivery was down 61 cents to $103.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.42 on Monday to settle at $103.98.

The dollar was up slightly at 81.90 yen from 81.70 yen earlier in the day.

[Associated Press; By CARLO PIOVANO]

Pamela Sampson in Bangkok contributed to this report.

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