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Markets flatfooted as US earnings season begins

Pan Pylas, AP Business Writer

Money traders work under a screen indicating the U.S. dollar is trading at 98.500 yen at a foreign exchange company, in Tokyo, Monday, April 8, 2013. (AP Photo/Itsuo Inouye)

LONDON (AP) -- A mixed earnings report from aluminum company Alcoa Corp. failed to provide markets with much direction Tuesday amid continuing concerns over North Korea, bird flu in China and Europe's debt crisis kept many investors on the sidelines.

Alcoa, as is traditional, kicked off the reporting season in an after-hours statement Monday with first-quarter earnings of 11 cents a share, well ahead of expectations of 8 cents. However, much of the impact in markets was negated by the news that revenues fell.

"The first company to unveil its update in a reporting season can often set the tone," said David Madden, market analyst at IG.

In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 6,295 while Germany's DAX fell 0.5 percent to 7,625. The CAC-40 in France was 0.3 percent lower at 3,658.

In the U.S., the Dow Jones industrial average was flat at 14,612 while the broader S&P 500 index fell 0.1 percent to 1,562.

Much of the focus in markets will remain on the U.S. corporate sector over the coming weeks as investors seek to assess the health of the world's largest economy. The flow of earnings picks up through the week with banks Wells Fargo and JPMorgan Chase due to report on Friday.

"Traders can sometimes appear a little over-reliant on the first number, setting the market up for a fall should the next readings serve to disappoint," said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

Another key focus will be Japanese financial assets.

The Nikkei 225 index in Tokyo has posted strong gains over the past week as the Bank of Japan unveiled an aggressive new approach to shake the world's third-largest economy out of its near-two-decade stagnation and growth-crippling deflation. The bank will pump huge amounts of money into the economy via government bond purchases and pursue a 2 percent inflation target in order to spark lending and spending.

Earlier, the rally ran out of stream and the Nikkei edged down slightly to close at 13,192.35. However, the yen continues to push four-year lows against the dollar, and was trading 0.5 percent lower at 99.09 yen. It hasn't breached 100 yen since April 2009.

Gains in Hong Kong and mainland China markets reflected a decreasing sense of alarm over the outbreak of a new bird flu strain in eastern China that has killed seven people so far. There is no sign that the virus is being transmitted from human to human.

Hong Kong's Hang Seng rose 0.7 percent to 21,870.34 and the Shanghai Composite Index added 0.6 percent to 2,225.77. The smaller Shenzhen Composite Index advanced 0.8 percent to 926.22.

Another focus in Asia has been the rise in tensions between the two Koreas, as Pyongyang recalled all its workers from the Kaesong industrial complex, the last major economic link between South Korea and North Korea. South Korea's Kospi rose 0.1 percent to 1,920.74 but the country's currency, the won, hovered at its lowest levels since July 2012.

Trading elsewhere was fairly lackluster, with the euro 0.2 percent higher on the day at $1.3045 and the benchmark New York oil rate down 15 cents at $93.21 a barrel.

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Pamela Sampson in Bangkok contributed to this report.