Global stocks stall on uneven Europe recovery

BANGKOK (AP) -- Global stock markets stalled Thursday, following evidence of an uneven recovery in Europe and lackluster U.S. consumer spending.

The combined economy of the 17 euro countries grew 0.3 percent in the April-June period, its first quarter of growth since recession hit the region in late 2011. But analysts attributed much of the rebound to the region's two largest economies, Germany and France. Germany's GDP for the period rose 0.7 percent, while's France rose an unexpected 0.5 percent.

Europe's smaller economies remained bogged down in debt and high unemployment, problems that will take years to resolve.

"What the GDP numbers have done is expose the continued fragmentation within a region where the various economies have different competitive advantages," said Michael Hewson, senior market strategist at CMC Markets.

In early European trading, Britain's FTSE 100 fell 0.3 percent to 6,567.71. Germany's DAX declined 0.3 percent to 8,409.10 and France's CAC-40 lost 0.2 percent to 4,107.11. Ahead of the opening bell on Wall Street, Dow Jones industrial futures fell 0.1 percent to 15,287. S&P 500 futures were down 0.1 percent to 1,680.

The losses began in Asia. Japan's Nikkei 225 index tumbled 2.1 percent to close at 13,752.94. Hong Kong's Hang Seng was flat at 22,539.25. Australia's S&P/ASX 200 fell 0.1 percent to 5,152.40.

Benchmark indexes in Singapore, Taiwan, Indonesia, mainland China and the Philippines fell. New Zealand's rose. South Korean markets were closed for a public holiday.

In the U.S., a poor earnings report from major retailer Macy's cast doubt on the outlook for consumer spending, a vital component of the U.S. economy. Macy's reported profits that fell short of analyst estimates, blaming shoppers' reluctance to spend for a slip in sales. Retail sales are closely watched because consumer spending accounts for 70 percent of U.S. economic activity.

Lorraine Tan, director at Standard & Poor's equity research in Singapore, said the weakness on the retail side was not too surprising, and reflects a shift toward shopping online.

"The real growth in retail spending in the States has been on the Internet side," Tan said. "It reflects a shift going on."

Later Thursday, the U.S. government will release the consumer price index for July. The results could have an impact on expectations of when the Fed will start to reduce its monetary stimulus. Most economists think that so-called tapering will start as soon as next month, but the Fed has expressed concern that inflation persistently below 2 percent could pose risks to the economy.

Aside from sharp swings in gas prices, inflation has barely increased in the past year. Modest economic growth and still-high unemployment has kept wages from rising quickly, making it harder for businesses to raise prices.

Benchmark oil for September delivery was up 60 cents to $107.44 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents to close at $106.85 a barrel on the Nymex on Wednesday.

In currencies, the euro rose to $1.3290 from $1.3257 late Wednesday. The dollar was nearly unchanged to 97.88 yen from 97.87 yen.

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