Asian stocks fall after US tumble; Europe gains

[August 11, 2011]  BANGKOK (AP) -- Asian stock markets continued their slump Thursday but European shares clawed back ground as traders awaited data that they hoped would show a brighter employment picture in the U.S.

Oil prices hovered below $83 a barrel, while the dollar slipped against the yen and the euro.

Britain's FTSE 100 rose 1.9 percent to 5,104 in early trade while Germany's DAX was 2.3 percent higher at 5,745. The CAC-40 in Paris rose 2.4 percent to 3,077.

Wall Street, pummeled after Standard and Poor's ratings agency stripped the U.S. of its sterling AAA credit rating last week, appeared set to gain. Dow futures rose 1.1 percent to 10,842 while S&P 500 futures were up 1.2 percent up 1,137.20.

Asian markets wobbled throughout the day amid pessimism about the health of the world's major economies. But the falls in Asia were muted compared with the rout on Wall Street on Wednesday, which saw the Dow plummet 4.6 percent.

Japan's Nikkei 225 index slipped 0.6 percent to close at 8,981.94 as a strengthening yen, which reduces the value of export earnings, clobbered Japan's crucial export sector.

Honda Motor Corp. and Nissan Motor Corp. each lost 3.5 percent. Consumer electronics giants also slid - Sony Corp. by 2.2 percent and Panasonic Corp. by 1.7 percent.

Hong Kong's Hang Seng index stumbled 1.1 percent to 19,558.78. South Korea's Kospi, vacillating in and out of negative territory, was up 0.6 percent to 1,817.44. Australia's S&P/ASX 200 was up less than 0.1 percent at 4,203.50 after earlier dropping about 2 percent.

A few markets eked out gains including China's Shanghai Composite Index.

Lee Kok Joo, head of research at Phillip Securities in Singapore, said investors were still reeling from the effects of the U.S. credit downgrade, poor economic outlook and fears of possible credit downgrades of AAA rated countries in Europe.

"Investors are keeping a portion of their holdings in cash and are waiting for a more opportune time to get into the market," he said.

U.S. weekly jobless claims, due to be released Thursday in Washington, would be a key factor in determining market direction in the coming days, he said.

"That is a very important number for the week," he said. "If that is disappointing, then that would cement investor fears that the employment situation in the U.S. is getting worse."

On Wall Street on Wednesday, the Dow Jones industrial average closed down 519 points at 10,719.94. The S&P 500 finished the day down 4.4 percent and the Nasdaq composite index dived 4.1 percent.

On Tuesday, the Federal Reserve said it planned to keep interest rates ultra-low for two more years since it sees almost no chance that the U.S. economy will improve substantially by 2013.

The other major market concern is Europe's debt crisis. Investors have grown increasingly worried that Italy and Spain could become the next European countries to have trouble repaying their debts. Greece, Ireland and Portugal have already received bailout loans because of Europe's 21-month-old debt crisis.

The fears have pushed investors to shun Spanish and Italian bonds, which have led to higher borrowing costs for the two countries. The European Central Bank stepped in Monday and began buying billions of euros worth of their bonds.

Benchmark oil for September delivery was down 27 cents to $82.62 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose $3.59, or 4.5 percent, to settle at $82.89 on Wednesday.

In London, Brent crude was down 48 cents to $106.20 per barrel on the ICE Futures exchange.

In currencies, the dollar weakened to 76.62 yen from 76.83 yen late Wednesday in New York. The euro rose to $1.4214 from $1.4208.

[Associated Press; By PAMELA SAMPSON]

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