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Market rally loses steam despite drop in US claims

Pan Pylas, AP Business Writer

A man walks past an electronic stock board of a securities firm showing the Nikkei 225 index in Tokyo, Wednesday, April 8, 2013. Japan's Nikkei 225 index rose 105.45 points to 14,285.69 Wednesday as Asian stock markets were powered higher by an improvement in China's trade and yet another record-busting session on Wall Street. (AP Photo/Koji Sasahara)

LONDON (AP) -- Higher-than-expected Chinese inflation figures on Thursday gave some investors a chance to cash in recent gains on the world's financial markets in spite of more good news from the U.S. with another fall in weekly jobless claims.

Nonetheless, many of the world's stock indexes remained within touching distance of their recent record highs after the 4,000 fall in U.S. claims to a new five-year low of 327,000.

"The latest reading continues to come in below forecast and so provides a positive surprise," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

However, the claims figures, coming on top of last week's surprisingly strong monthly nonfarm payrolls data for April, failed to help European stocks recover earlier losses or and give an early boost to U.S. trading.

In Europe, Germany's DAX, which has set a series of record highs, was up a further 0.16 percent at 8,262. The CAC-40 in France ended Thursday 0.7 percent lower at 3,942 while the FTSE 100 index of leading British shares dropped slightly, 0.02 percent, to 6,581, broadly unaffected by the expected decision by the Bank of England to keep its monetary policy unchanged.

Trading in many parts of Europe was light as many countries were on a public holiday, though markets remained open.

In the U.S., the Dow Jones industrial average was down 0.05 percent at 15,1097 while the broader S&P 500 index fell 0.2 percent to 1,628.

The claims figures helped shore up the dollar, which was making another attempt to breach the 100 yen mark. Several attempts over the past few weeks have just fallen short. It was 0.4 percent higher at 99.34 yen, while the euro was trading 0.4 percent lower at $1.3104.

Earlier, government figures showing China's consumer price index rose 2.4 percent in the year to April, up from 2.1 percent the previous month and ahead of expectations of a more modest advance to 2.2 percent, had given the markets a soft tone.

Many reasons have been cited for the recent strength of stock markets around the world, including hopes over the U.S. economy, a seeming easing in Europe's debt crisis and an aggressive new monetary policy from the Bank of Japan.

Earlier, Japan's Nikkei 225 index dropped 0.7 percent to 14,191.48 — a modest retreat after a strong run that's sent the Nikkei up to five-year highs.

Another aspect of the Bank of Japan's massive monetary stimulus has been to weaken the yen dramatically. That feeds through into stocks as a lower currency makes the country's exports relatively cheaper.

Elsewhere in Asia, Hong Kong's Hang Seng fell 0.1 percent to 23,211.48 after the Chinese inflation figures. However, mainland Chinese shares were mixed with the Shanghai Composite Index down 0.6 percent to 2,232.97 while the smaller Shenzhen Composite Index gained 0.2 percent to 967.69.

South Korea's Kospi index was also in focus as it jumped 1.2 percent to 1,979.45 after the Bank of Korea lowered its benchmark interest rate for the first time in seven months. In announcing that it was lowering the rate by a quarter percentage point to 2.5 percent, the Bank of Korea became the latest central bank to take steps to boost flagging economic growth.

Oil prices drifted lower following recent strong gains — the benchmark New York contract was down 83 cents at $95.79 a barrel.