Sagging Japan trade, debt crisis hit world stocks

BANGKOK (AP) — Sagging exports from earthquake-hobbled Japan and Europe’s deepening debt crisis sent world stock markets lower Wednesday.

Oil prices fell below $99 a barrel amid indications of weakening fuel demand in the U.S. In currencies, the dollar strengthened against the euro and the yen.

Major European benchmarks were down in early trading amid renewed fears that the debt crisis in countries such as Greece and Portugal could spread to bigger economies including Spain and Italy.

Britain’s FTSE 100 dropped 0.1 percent to 5,850.30 and Germany’s DAX fell 0.4 percent to 7,123.35. France’s CAC-40 shed 0.2 percent to 3,907.57. Wall Street was headed lower, with Dow Jones industrial futures down 55 points to 12,272 and S&P 500 futures losing 5.7 points to 1,307.90.

Tey Tze Ming, a trader at Saxo Capital Markets in Singapore, said investors see trouble on the horizon and have decided to shy away from riskier assets.

“Our forecast for stocks over the next three or four months, is that they are probably going to be going sideways, or down,” he said.

Tokyo’s Nikkei 225 lost 0.6 percent to 9,422.88 after government figures showed the country’s exports slid 12.5 percent in April after the March 11 earthquake and tsunami destroyed hundreds of factories and forced manufacturers like Toyota Motor Corp. to suspend production. The index has lost 8.1 percent since the quake.

Japan’s auto shipments took a beating, sliding by a staggering 67 percent. U.S.-bound auto shipments nose-dived nearly 74 percent, while auto exports to China plunged 69 percent.

Bank of America Merrill Lynch said the Japanese economy would be constrained by parts and power shortages for two more quarters but begin to recover strongly from the final quarter of 2011.

Elsewhere, South Korea’s Kospi sank 1.3 percent to 2,035.87 and Australia’s S&P/ASX 200 lost 1 percent to 4,584.70. Benchmarks in Taiwan, Thailand and Indonesia were also down, while Hong Kong’s Hang Seng was up 0.1 percent to 22,747.28.

Mainland Chinese shares fell on expectations of new monetary tightening policies to counter inflation that might also slow economic growth. The benchmark Shanghai Composite Index lost 0.9 percent to 2,741.74, the fifth straight losing session, and the Shenzhen Composite Index lost 1.5 percent to 1,134.19.

Airline shares sagged throughout Asia as ash spewing from an Icelandic volcano grounded hundreds of flights in Europe. Korean Air Lines lost 3.7 percent, China Eastern Airlines slid 2.9 percent, and Taiwan’s EVA Airways dropped 3.1 percent.

Sony Corp. dropped 1.5 percent in Tokyo after the electronics and entertainment giant announced it had suffered another online security breach, this time for 2,000 customers in Canada. More than 100 million online accounts have been affected in a suspected hacking of Sony’s PlayStation Network gaming service and other online services that began last month.

Markets faced troubling news about Europe on Tuesday, when Greece’s main opposition party said it opposed the government’s latest attempts to reduce debt. The news further dimmed hopes that the country might be able to repair its finances enough to get another loan package from the International Monetary Fund.

Ratings agency Moody’s also warned that a restructuring of Greece’s debt would be considered a default. That would cause borrowing costs for other debt-strapped European countries to soar.

Fears that a Greek default could start a chain reaction affecting larger countries like Spain — the fourth-largest economy in Europe — pushed Wall Street lower. The Dow Jones industrial average 0.2 percent to close at 12,356.21. The Standard & Poor’s 500 index fell 1.1 points to 1,316.28. The Nasdaq composite fell 0.5 percent to 2,746.16.

Benchmark crude for July delivery was down $1.03 to $98.56 in electronic trading on the New York Mercantile Exchange on Wednesday. The contract gained $1.89 to settle at $99.59 a barrel on Tuesday.

In currencies, the euro slipped to $1.4038 from $1.4113 in late trading Tuesday in New York. The dollar rose to 82.10 yen from 81.97 yen.

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