World stocks lackluster as traders eye US job data

[July 02, 2009]  HONG KONG (AP) -- Most Asian markets fell Thursday as investors tread cautiously ahead of a key U.S. jobs report expected to show unemployment hit a 26-year-high despite signs of recovery in the world's largest economy. European markets opened lower.

Markets across Asia zigzagged in thin trade throughout the day before closing mostly lower, suggesting investors were reluctant to place bets for now. Oil prices slipped below $69 a barrel, while the dollar gained modestly against the yen and euro.

Investors will be watching closely U.S. jobs figures, due out later Thursday, that economist say will show another uptick in the unemployment rate from 9.4 percent in May to 9.6 percent in June -- marking the highest since 1983.

Growing unemployment has kept investors on edge in recent months because it suggests the financial health of American consumers, whose spending habits are so critical to the U.S. economy and Asian exporters, is shaky.

"The biggest concern is if unemployment hits above 10 percent," said Alex Tang, head of research at Core Pacific-Yamaichi International in Hong Kong. "That will create lots of uncertainty about the pace of recovery in the U.S., and that's definitely a major worry right now."

While economists see the U.S. shedding 363,000 jobs in June compared to 345,000 in May, that might be cause for modest optimism among investors because it would add to the evidence that rate of layoffs is declining and companies have already made their most severe cuts.

European markets followed Asia lower as investors awaited the European Central Bank's interest rate decision. The bank is widely expected to keep its key interest rate steady at 1 percent while gauging whether a massive infusion of credit into the banking system will help Europe's struggling economy.

Britain's FTSE 100 lost 0.8 percent, Germany's DAX shed 1.6 percent and France's CAC-40 was off 1.3 percent. U.S. futures pointed to a lower open Thursday. Dow futures dropped 45, or 0.5 percent, to 8,403 and S&P futures were down 5, or 0.5 percent, to 914.20.

Despite overnight gains on Wall Street Wednesday, Asian markets couldn't hold an early rise in the day.

Tokyo's Nikkei 225 stock average gave back its gains to fall 63.78, or 0.6 percent, to 9,876.15. In Hong Kong, the Hang Seng fell 200.68 points, or 1.1 percent, to 18,178.05, after the market was closed Wednesday for a holiday.

Elsewhere, Korea's Kospi closed flat in back-and-forth trade. Markets in Australia and Shanghai gained, while India's Sensex was down 0.6 percent. Taiwan's benchmark rose 1.4 percent.

Traders see a confluence of factors that could keep the markets adrift in the coming weeks: quieter summer months, caution ahead of earnings reports in August, and signs stocks are fairly priced after the spring rally.

But because most of the economic evidence points to a bottoming out, neither are markets likely to suffer big losses for now.

"Everybody is well positioned and recent IPOs and placements have generally fared well," said John Mar, co-head of sales trading at Daiwa Securities SMBC Co. in Hong Kong. "I don't think anyone sees a sharp pullback ... Near term there doesn't seem to be anything that's going to shock the market."

In the U.S. overnight, reassuring data on manufacturing and housing lifted Wall Street higher to start the quarter.

The Dow rose 57.06, or 0.7 percent, to 8,504.06. It climbed as high as 8,580.47 in earlier trading, but then pared its gains as the day went on. The Standard & Poor's 500 index rose 4.01, or 0.4 percent, to 923.33. The Nasdaq composite index rose 10.68, or 0.6 percent, to 1,845.72.

Oil prices slipped below $69 a barrel late in the day in Asia, with benchmark crude for August delivery off $1 at $68.31. On Tuesday, it fell 58 cents to settle at $69.31.

The dollar traded at 96.68 yen from 96.51 yen late Wednesday in New York. The euro was lower at $1.4095 from $1.4150.

[Associated Press; By JEREMIAH MARQUEZ]

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