World stocks get boost as Europe rebounds
Tuesday, July 19, 2011
SEOUL, South Korea (AP) — Lackluster world stocks got a boost Tuesday from an early rebound in Europe and the U.S. as debt worries that have shadowed both regions in recent days kept Asian markets largely in check.
In Asia, Japan’s Nikkei 225 stock average extended losses to decline 0.9 percent to 9,889.72 after being closed for a national holiday Monday. Hong Kong’s Hang Seng recovered from earlier declines to gain 0.5 percent to 21,902.40 while mainland China’s Shanghai Composite Index fell 0.7 percent to 2,796.98.
In early European trading the tone was positive with major benchmarks starting higher in a technical rebound after losses the day before. The FTSE 100 index rose 0.5 percent to 5,781.82 and Germany’s DAX gained 1.4 percent to 7,210.30. France’s CAC-40 advanced 0.9 percent to 3,683.13.
U.S. stocks were also set to gain after declines Monday. Dow futures rose 0.6 percent to 12,400 and S&P 500 futures were up 0.6 percent to 1,307.80.
The lack of major movement either up or down Tuesday in Asia came amid continuing concern that Europe’s debt crisis could harm larger economies and worries that the U.S. might not raise its debt ceiling by an early August deadline.
“Investors are very cautious,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong.
“The euro crisis has been going on forever and it is still overhanging the market,” he said.
Elsewhere in Asia, South Korea’s Kospi reversed earlier gains to fall marginally to 2,130.21. Australia’s benchmark S&P/ASX 200 also fell by a fraction.
Shares in Singapore, India, Thailand, the Philippines and New Zealand posted modest gains.
In Europe, investors fret that debt problems in smaller economies such as Greece will spread to larger ones such as Italy and Spain. Adding to pessimism, were the results of so-called stress tests on European banks released last week. Eight institutions failed the test aimed at measuring how well they would withstand further financial strain.
Greek Finance Minister Evangelos Venizelos said in an interview with The Associated Press late Monday that a European debt deal is “attainable” at an emergency EU summit Thursday in a sign of possible progress in talks between European governments and private bond holders in drawing up a new rescue deal for Greece.
The U.S. debt limit debate also remains unresolved with the Aug. 2 deadline now two weeks away. The Treasury Department says the limit must be raised by that date or the government risks defaulting on its debt. Considering the need for legislation to enable such a move, however, an actual deal has to be crafted sooner.
In currencies, the dollar fell slightly to 79.03 yen from 79.05 yen late Monday in New York. The euro, meanwhile, strengthened to $1.4185 from $1.4090.
Oil prices crept above $96 a barrel in Asia amid expectations U.S. crude supplies dropped last week.
Benchmark oil for August delivery was up 68 cents to $96.58 a barrel in electronic trading on the New York Mercantile Exchange. Crude gave up $1.31 to settle at $95.93 on Monday.
Associated Press writer Alex Kennedy in Singapore contributed to this report.
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