Asian markets bounce back as European rally stalls

[September 29, 2009]  LONDON (AP) -- European stock markets fell modestly Tuesday, taking a breather after the previous day's rally, while investors in Asia warmed to a brace of deals that had boosted confidence in U.S. and European stock markets.

In Europe, the FTSE 100 index of leading British shares was down 19.99 points, or 0.4 percent, to 5,145.71 while Germany's DAX fell 37.01 points, or 0.7 percent, to 5,699.30. The CAC-40 in France was 14.81 points, or 0.4 percent, lower at 3,810.19.

Earlier in Asia, stocks bounced back following Monday's big gains in Europe and the U.S. in the wake of Abbott Laboratories' acquisition of the pharmaceutical business of Belgian chemicals maker Solvay for $6.6 billion and Xerox Corp. agreement to buy Affiliated Computer Services for about $6.4 billion.

The deals helped end a three-day retreat on Wall Street and further fueled hopes that the global economy is on a sounder footing -- one corollary of increased confidence is an increase in mergers and acquisitions.

"Those deals added some momentum to market that was beginning to look rather sluggish and lacking direction," said David Buik, markets analyst at BGC Partners.

The biggest news in Europe Tuesday centered around French bank BNP Paribas SA, which launched a euro4.3 billion ($6.3 billion) rights issue to help repay the emergency funding it received from the French government.

France's largest bank plans to reimburse euro5.1 billion in loans plus euro226 million in interest.

The French government injected billions into BNP Paribas and other French banks to keep them lending when credit markets dried up in the aftermath of the collapse of Lehman Brothers last year.

BNP Paribas shares topped the list of risers on the CAC-40, rising by 2.4 percent in late-morning trade.

Earlier, Hong Kong's Hang Seng index led the gains in Asia with a 2 percent jump to 21,005.72. Japan's benchmark Nikkei 225 stock average rose 90.68, or 0.9 percent, to 10,100.20, while South Korea's key index added 0.9 percent to 1,690.05.

Elsewhere, Australia's benchmark added 1.6 percent, Taiwan's market jumped 2 percent and Singapore rose 1.4 percent.

China's Shanghai index bucked the trend, falling 0.3 percent to 2,754.54 as a wave of initial public offerings weighed on prices. China's financial markets will be closed from Thursday for public holidays and reopen Oct. 9.

Japanese exporters pared recent losses, with automaker Nissan Motor Co. up 3.3 percent and Toshiba Corp. up 2.9 percent after the yen fell back from eight-month highs against the dollar. A higher yen hurts exporters by reducing the value of overseas profits when repatriated.

As in Europe, Wall Street was poised to pare some of Monday's gains -- the Dow Jones industrial average closed 1.3 percent higher Monday at 9,789.36, while the broader Standard & Poor's 500 index ended 1.8 percent higher at 1,062.98.

Dow futures were down 14 points, or 0.1 percent, at 9,714 while the S&P 500 futures fell 2.5 points, or 0.2 percent, to 1,056.50.

Oil prices fell modestly, with benchmark crude for November delivery down 29 cents at $66.55 a barrel.

The euro fell 0.3 percent to $1.4577, while the dollar was back up near the 90 yen mark, having fallen on Monday to 88.222 yen, its lowest level since January.

[Associated Press; By PAN PYLAS]

Associated Press writer Tomoko A. Hosaka in Tokyo contributed to this report.

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