Sun, Jan 29, 2012 - Page 5 News List

World stocks slide on Spain, US data

SOUR SENTIMENT:A sharp rise in Spain’s unemployment rate, a cut in P&G’s earnings outlook and a profit warning from Japan’s NEC all helped to push world stocks lower

AP, London

World stocks turned lower on Friday after official data showed the US economic recovery was not as fast as many had hoped.

The US Department of Commerce said that the US economy, the world’s largest, grew at a modest 2.8 percent in the final three months of last year, while economists had expected growth of 3 percent.

With the data suggesting the US recovery would continue to be a slow process, investors sold off stocks to cash in on gains made so far this month.

Britain’s FTSE 100 was down 1.1 percent to 5,733, while Germany’s DAX fell 0.4 percent to 6,511.98 and France’s CAC-40 lost 1.3 percent to 3,318.76. The euro was up 0.83 percent at US$1.3189.

Wall Street edged lower on the open — the Dow Jones industrial average fell 94 points to 12,639 and Standard and Poor’s (S&P) 500 5.8 points to 1,312.

Other economic and corporate news released on Friday contributed to sour market sentiment.

Consumer products maker Procter & Gamble Co cut its earnings outlook and Ford Motor Co fell short of Wall Street expectations, while Japanese games and electronics companies Nintendo and NEC issued profit warnings.

In Europe, traders digested grim statistics from Spain showing more than 5 million people without jobs. The National Statistics Institute said the unemployment rate shot up from 21.5 percent — already the highest in the eurozone — to 22.8 percent in the fourth quarter.

Attention was also focused on the resumption of talks to reach a deal on how Greece can avoid a catastrophic default on its debt. Greece and its bailout rescuers — other countries that use the euro and the IMF — are asking private creditors to swap their Greek bonds for new ones with a lower value, interest rate and much longer maturity.

The two sides have so far disagreed over what interest rate the new bonds should take. Some negotiators have said they hope to have a deal this weekend, in time for a European leaders’ meeting tomorrow.

While investors appear to expect a deal at some point — the euro was up and eurozone borrowing rates were down, suggesting a steady increase in confidence — some worried that the crisis was far from over.

Getting economies like Portugal to grow is fast becoming a priority and is expected to be one of the main topics of discussion at the European leaders’ summit.

Earlier in the day, Asian markets showed little momentum ahead of the weekend.

Japan’s Nikkei 225 index fell 0.1 percent to close at 8,841.22, while South Korea’s KOSPI rose 0.4 percent to 1,964.83. Hong Kong’s Hang Seng rose 0.3 percent to 20,501.67 and Australia’s S&P/ASX 200 gained 0.4 percent to 4,288.40.

Japanese exporters continued to be hit by a strong yen, which reduces the value of repatriated profits. The US dollar fell to ¥76.81 from ¥77.49.

This story has been viewed 2055 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top