World stocks sag before Federal Reserve meeting

World stock markets sag as US jobs data, China trade show signs of weakness

Associated Press

BANGKOK (AP) -- World stock markets sagged Monday, ahead of a meeting by Federal Reserve policy makers who are expected to announce new plans to stimulate a sluggish U.S. economy in response to a disappointing jobs report.

The U.S. government reported Friday that 96,000 jobs were created in the U.S. last month, fewer than economists had forecast. The unemployment rate fell to 8.1 percent from 8.3 percent, but only because many people gave up looking for work, so they were no longer counted as unemployed.

Investors are hoping the Fed will announce another round of bond-buying, known as quantitative easing, at its meeting later this week to help lower interest rates and thus boost loan growth.

Britain's FTSE 100 fell 0.3 percent to 5,780.58 in early trading. Germany's DAX was slightly down at 7,210.70. France's CAC-40 shed 0.1 percent to 3,514.78. Wall Street also braced for a lower opening, with Dow Jones industrial futures losing 0.2 percent to 13,273 and S&P 500 futures down 0.2 percent to 1,434.80.

Asian stocks faced a mixed day of trading. Japan's Nikkei 225 fell marginally to close at 8,869.37 after the government said the economy grew at a slower pace than earlier estimated for the April-June quarter. Growth stood at an annual 0.7 percent, slower than the 1.4 percent given in August.

South Korea's Kospi fell 0.3 percent to 1,924.70. But Hong Kong's Hang Seng gained 0.1 percent to 19,827.17 and Australia's S&P/ASX 200 added 0.2 percent to 4,333.80. On mainland China, the Shanghai Composite Index gained 0.3 percent to 2,134.89 and the smaller Shenzhen Composite Index added 0.9 percent to 899.72.

Fears of a global economic slowdown were compounded after China released trade data showing that imports shrank and export growth was muted in August. That came on top of the release over the weekend of data showing sluggish Chinese industrial production and investment.

Slowing growth in China raised expectations of fiscal policy stimulus from authorities in mainland China, said Linus Yip, strategist at First Shanghai Securities in Hong Kong.

"I think people are expecting more fiscal policy," he said.

The Chinese government last week approved 55 investment projects worth 1 trillion yuan ($157.7 billion) to build highways, ports and railways across the country, Xinhua news agency reported.

That helped boost Chinese infrastructure stocks. Hong Kong-listed Anhui Conch Cement gained 3.3 percent and Shanghai-listed Fujian Cement soared 7.6 percent.

Australian mining shares jumped. Rio Tinto Ltd. rose 4.4 percent, Newcrest Mining Ltd. added 4.5 percent and Fortescue Metals Group surged 7.3 percent.

Benchmark oil for October delivery rose 10 cents to $96.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 89 cents to finish at $96.42 per barrel on the Nymex on Friday.

In currencies, the euro dipped to $1.2776 from $1.2795 late Friday in New York. The dollar was unchanged at 78.29 yen.

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