World stocks fall ahead of US economic data

World stock markets fall ahead of US data expected to show economy continuing to improve

Associated Press
Elevated oil prices weighing on markets
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BANGKOK (AP) -- World stock markets fell Monday as high oil prices dampened enthusiasm for riskier assets like stocks ahead of the release of data likely to show that the U.S. economy is improving at a slow but steady clip.

Benchmark oil remained near $109 per barrel while the dollar rose against the euro but fell against the yen.

European stock markets headed lower in early trading. Britain's FTSE 100 shed 0.6 percent to 5,900.72. Germany's DAX lost 0.9 percent to 6,799.99 and France's CAC-40 lost 1.1 percent to 3,431.18. Wall Street was set to open lower, with Dow Jones industrial futures losing 0.4 percent to 12,910 and S&P 500 futures down 0.5 percent to 1,356.80.

In Asia, Japan's Nikkei 225 index ended down 0.1 percent at 9,633.9, giving up gains posted earlier in the day. Hong Kong's Hang fell 0.8 percent to 21,217.86. South Korea's Kospi lost 1.4 percent to 1,991.16. Australia's S&P/ASX 200 dropped 0.9 percent to 4,267.40.

But mainland Chinese shares advanced. The benchmark Shanghai Composite Index added 0.3 percent to 2,447.06 and the Shenzhen Composite Index gained 0.3 percent to 975.62.

U.S. consumer confidence figures to be released Tuesday and the Federal Reserve's so-called Beige Book report on economic activity due Wednesday are likely to show improvement, analysts said.

Credit Agricole CIB in Hong Kong said in an email that "economic data over coming days will likely prove encouraging, with more signs of ongoing economic recovery in the US in particular."

In Australia, sentiment was hurt by higher oil prices and a strong currency, said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"The Australian consumer has to contend with the general impact of the higher Australian dollar, which is causing some nervousness to employment security and job security in some parts of the economy," he said.

The higher Aussie dollar makes raises the cost of products sold abroad, hurting manufacturing exporters. Higher oil prices force motorists to spend more at the gas pump, which could dent discretionary spending.

Among Australian shares, Billabong International Ltd. jumped 4.8 percent after the struggling surf wear retailer rejected a takeover offer from buyout company TPG Capital but said it would continue talks.

Banking stocks fell following downgrades Friday by the Fitch ratings agency. Commonwealth Bank of Australia lost 0.5 percent, Westpac Banking shed 0.3 percent and National Australia Bank was down 0.1 percent.

Higher oil prices translate into higher fuel costs for airlines, which are already struggling with weak global demand. That is hurting aviation stocks such as Korean Air Lines Co., down 4.6 percent. Hong Kong-listed Air China Ltd. tumbled 3.4 percent.

Mainland Chinese shares advanced for a seventh straight trading day as hopes for an easing of restrictions on housing purchases help drive the rally. Shares were also boosted Monday by news that foreign model cars were omitted from a list of vehicles approved for purchase by government agencies.

Dongfeng Automobile Co. jumped by the 10 percent daily limit while FAW rose 2 percent. Appliance makers gained on speculation over government measures to boost demand, with Qingdao Haier Co. climbing 3.6 percent.

U.S. stock indexes have in general been climbing since November as European officials redoubled their efforts to contain the region's debt crisis.

Greece on Friday made a formal offer to creditors to swap their Greek government bonds for new ones in another step toward knocking 107 billion euros ($142 billion) off its debts. The swap is part of a deal to prevent Greece from defaulting on a debt payment due next month.

The Greek Finance Ministry issued the formal offer to banks and other investment funds under which creditors are called on to accept losses of more than half the face value of the bonds they hold in return for new bonds with longer maturities.

Benchmark oil for April delivery was down $1.23 to $108.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose by $1.94 to finish at $109.77 per barrel on the Nymex on Friday.

In currencies, the euro fell to $1.3418 from $1.3466 late Friday in New York. The dollar fell to 80.86 yen from 80.98 yen.

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AP researcher Fu Ting contributed from Shanghai.

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