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World stocks slump on US job growth worries

/ 05:30 PM April 04, 2012

BANGKOK, Thailand — World stock markets fell into negative territory Wednesday after the U.S. Federal Reserve voiced concern about U.S. job growth but appeared to refrain from taking steps to prop up the economy.

Benchmark oil fell below $104 per barrel while the dollar rose against the euro but fell against the yen.

European stocks fell in early trading. Britain’s FTSE 100 lost 0.7 percent to 5,796.11. Germany’s DAX dropped 1.2 percent to 6,894.29 and France’s CAC-40 lost 0.9 percent to 3,375.09. Wall Street, too, was headed to a lower opening, with Dow Jones industrial futures down 0.5 percent to 13,072 and S&P 500 futures lowing 0.5 percent to 1,401.80.


Asian stocks also faltered. Japan’s Nikkei 225 index plunged 2.3 percent to 9,819.99, its lowest close in nearly a month. South Korea’s Kospi tumbled 1.5 percent to 2,018.61 and Australia’s S&P/ASX 200 was marginally lower at 4,333.90.

Markets in mainland China, Hong Kong and Taiwan were closed for public holidays.

Wall Street stocks slumped Tuesday, after minutes were released from the March meeting of the U.S. Federal Reserve’s Open Market Committee that showed policymakers fear hiring could slow if economic growth doesn’t improve.

The minutes also did not address the logistics of more bond-buying — troubling to traders who have been hoping for more Fed action.

The Fed has embarked on two previous rounds of bond-buying, most recently in August 2010, to drive down long-term interest rates. Low bond yields generally encourage investors to shift money to buying stocks.

Analysts had different expectations for China, where sluggish manufacturing and export demand have prompted speculation of further efforts to stimulate the economy.

China faces a challenge in keeping growth from stalling while avoiding an inflationary rebound.

Economic growth declined to 8.9 percent in the final quarter of last year after Beijing hiked interest rates and tightened other controls to cool inflation.


Chinese leaders reversed course in December and promised more bank lending to help companies cope with the slump in global demand, but changes have been gradual.

Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong, said in an e-mail that he expects policy easing “in the near term” in the form of cuts in either the lending rate or the level of reserves banks are required to hold.

“We believe that slowing growth and lower inflation have persuaded policy makers to ease in a more decisive way to ensure that growth target will be met,” he said.

Japanese exporters suffered sharp declines. Honda Motor Corp. slid 3.1 percent, Sharp Corp. dropped 3.7 percent and Nikon Corp. fell 2.6 percent.

South Korea’s Hyundai Heavy Industries Co. lost 2.3 percent. Newcrest Mining Ltd., a leading Australian gold miner, fell 2.4 percent on tumbling gold prices. Japan’s Fast Retailing Co. plummeted 5.7 percent.

Benchmark oil for May delivery was down 44 cents to $103.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.22 to settle at $104.01 per barrel in New York on Tuesday.

In currencies, the euro fell to $1.3177 from $1.3217 late Tuesday in New York. The dollar fell to 82.64 yen from 82.86 yen.

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TAGS: Business, economy, Markets and Exchanges, Nikkei, US Federal Reserves, Wall Street, World stock market
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