BANGKOK (AP) -- Global stock markets were mostly lower Tuesday despite an upbeat report on U.S. service industries that are the main driver of growth in the world's No. 1 economy.
Confidence dimmed even though the Institute for Supply Management said U.S. services activity expanded in July at the fastest pace in five months. Its index rose to 56 points from 52.2 in June, the highest reading since February and above market expectations. Any reading over 50 indicates expansion and the higher the number, the stronger the growth.
The findings echoed a surge in the manufacturing sector in July, but weren't enough to overcome jitters about job growth, which remains sluggish. On top of that, analysts said, factory production could fall back a bit, since last month's report also showed a reduction in order backlogs.
"With employment still expanding albeit at a slower pace, and backlog of orders contracting, there is still cause for a side of caution with all that optimism," said Sterne Agee analyst Lindsey Piegza in a commentary.
In early European trading, Britain's FTSE 100 fell 0.2 percent to 6,601.53. Germany's DAX was down 0.1 percent to 8,388.02. France's CAC-40 was marginally lower at 4,049.30. Wall Street futures slipped. Dow Jones industrial futures were marginally lower to 15,552. S&P 500 futures fell slightly to 1,702.
Japan's benchmark Nikkei 225 finished 1 percent higher at 14,401.06 after shaking off earlier losses.
Other Asian markets sagged. South Korea's Kospi shed 0.5 percent to 1,906.62. Australia's S&P/ASX 200 lost 0.1 percent to 5,105.60. Benchmarks in Singapore, Taiwan, New Zealand and the Philippines also fell. Mainland Chinese shares rose.
Hong Kong's Hang Seng dropped 1.3 percent to 21,923.70, dragged down by HSBC Holdings, which plunged 5 percent a day after the bank reported weaker-than-expected revenue for the first half of the year.
"The market expected too much and the earnings came up a little bit short. Also worries about the international banking business dragged down the whole sector and that gave the market an excuse to take a breather," said Jackson Wong, vice president of Tanrich Securities in Hong Kong. "Market conditions were really tough in the first half of the year."
Other banking giants in Hong Kong fell. The Industrial & Commercial Bank of China, the world's largest bank by market value, was down 1.4 percent. China Construction Bank lost 1.2 percent.
Australian hearing implant maker Cochlear rose 1.4 percent after its net profit more than doubled in the 2012-13 financial year to $133 million. Sony Corp. dropped 4.6 percent in Tokyo after rejecting a U.S. hedge fund's proposal to sell part of its entertainment business.
Investors were also displaying caution as they try to determine when the U.S. Federal Reserve might be ready to rein in its monetary stimulus plan.
Economists expect the Fed to start cutting back in September or October on its monthly purchases of $85 billion in bonds. The Fed has been pumping money into the U.S. economy for more than four years in an effort to keep interest rates down and help boost lending. The program has been a boon to stocks, where investors have fled in search of higher returns.
Benchmark crude for September delivery was down 31 cents to $106.25 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 38 cents to close at $106.56 on the Nymex on Monday.
In currencies, the euro rose to $1.3264 from $1.3252 late Monday. The dollar rose to 98.36 yen from 98.30 yen.
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