World stock markets mixed amid US recession fears

[August 22, 2011]  BANGKOK (AP) -- World stocks swung between gains and losses Monday, as hopes the Federal Reserve might take action to keep the U.S. from slipping back into recession offset fears of a global slowdown.

Brent crude fell to near $106 a barrel as Libyan rebels captured most of Tripoli, boosting hopes the OPEC nation's oil exports could resume soon. The dollar was stronger against the yen but weaker against the euro.

Britain's FTSE 100 jumped 1 percent to 5,088.33 while Germany's DAX remained steady at 5,482.21. France's CAC 40 rose 1 percent to 3,046.13. Wall Street was set to gain, with Dow Jones industrial futures up 0.7 percent to 10,893 while S&P 500 futures added 0.8 percent to 1,133.40.

The gains came following a jittery day of trading in Asia.

Investors are looking with anticipation to a speech Friday by U.S. Federal Reserve Chairman Ben Bernanke at a retreat in Wyoming.

The Fed pledged earlier this month to keep interest rates super-low through mid-2013. Investors hope Bernanke will announce, or at least preview, further steps to help the economy including a third round of bond purchases known as quantitative easing.

"I think Ben Bernanke's meeting in Jackson Hole will be very much in focus here," said Tom Kaan, head of equity sales at Louis Capital Markets in Hong Kong. The consensus is that a third round of quantitative easing will come in some form, he said.

"The world is in a very dire situation at the moment," Kaan said. "People will react. Most of that reaction will come from fear."

Japan's Nikkei 225 index lost 1 percent to close at 8,628.13 -- a five-month low -- as a persistently strong yen rattled nerves. A strong yen hurts exports by making them more expensive.

Japan intervened in currency markets earlier this month to try to reverse the yen's climb. The decision to sell the yen and buy the dollar worked initially, sending the greenback toward 80 yen. But the dollar has been weighed down by the dimming outlook for U.S. economy and is back down to mid 76-yen levels.

Toyota Motor Corp. dropped 2.5 percent. Nissan Motor Corp. slid 4.1 percent and Mazda Motor Corp. tumbled 5 percent. Tire maker Bridgestone Corp. lost 3.4 percent.

South Korea's Kospi also took a hit, dropping 2 percent to 1,710.70.

Hyundai Heavy Industries Co., South Korea's leading shipbuilder, toppled 4.4 percent.

Mainland Chinese shares sank for a fifth straight trading day as investors fretted over possible monetary tightening measures, and over the global outlook.

The Shanghai Composite Index lost 0.7 percent to 2,515.86 while the Shenzhen Composite Index lost 0.9 percent to 1,124.17. Shares in cement, food-related industries and banks weakened.

Hong Kong's Hang Seng swung into positive territory to eke out a 0.5 percent gain at 19,486.87. China Mobile Ltd. jumped 2.9 percent.

Fears that European banks may be headed for huge losses on government bonds have caused investors to unload banking shares in Europe and elsewhere.

China Construction Bank Ltd., the country's third-biggest commercial lender, was down 1.3 percent despite announcing that its first half profit rose 31 percent from a year earlier. The Industrial and Commercial Bank of China, the world's biggest bank by market value, lost 1.2 percent. Japan's Mizuho Financial Group fell 2.6 percent.

Asian markets were the first to open after the developments in Libya, with the apparent crumbling of Moammar Gadhafi's regime after rebels entered the capital of Tripoli on Sunday. Oil prices are expected to fall if the situation can quickly stabilize.

Libya used to export about 1.5 million barrels of oil a day, but production all but ground to a halt in recent months as rebels battled to overthrow Gadhafi.

Stocks in the U.S. fell Friday to end a fourth straight week in the red, amid fears the U.S. economy is headed toward another recession. The Dow Jones industrial average lost 172.93 points, or 1.6 percent, to close at 10,817.65. Since July 21, the Dow has fallen about 15 percent.

The dollar hit a new post-World War II low against the Japanese yen Friday as investors flocked toward safety. The dollar fell as low as 75.94 yen in New York before rebounding to 76.48 later. On Monday, the dollar rose to 76.79 yen.

The euro rose to $1.4399 from $1.4387 on Friday.

Benchmark oil for September delivery was up 5 cents to $82.31 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell 12 cents to settle at $82.26 on Friday.

In London, Brent crude for October delivery was down $2.02 per barrel to $106.60 on the ICE Futures exchange.

[Associated Press; By PAMELA SAMPSON]

AP researcher Fu Ting contributed from Shanghai.

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