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2008-12-02 09:28:13
LONDON European stocks were little changed Tuesday as hopes of a modest
rebound on Wall Street following the previous day's savage retreat helped
offset an overnight slump in Asian markets.
The FTSE 100 index of leading British shares was basically unchanged, up 0.19
points at 4,065.68, while the CAC-40 index in France was down a bare 1.30
points at 3,079.13. Germany's DAX was the best performing European index, up
52.08 points, or 1.2 percent, at 4,446.87.
Earlier, Asian markets slid with Japan's Nikkei 225 stock average tumbled
533.53 points, or 6.4 percent, to 7,863.69, and Hong Kong's Hang Seng index
lost5 percent to 13,405.85.
The heavy losses in Asia followed near 5 percent declines in Europe on Monday
and the near 700 point, or 7.7 percent, slide in the Dow Jones index of leading
U.S. shares, which wiped out more than half of last week's gains.
The gloom gripping world markets at present was stoked by a run of bad data
across the world, increasing fears that the length and depth of the global
economic downturn will be bigger than anticipated.
It all culminated with Monday's announcement by the National Bureau of Economic
Research (NBER), considered the arbiter of the U.S. economic cycle, that the
world's largest economy entered a recession in December 2007, much earlier than
most predictions.
The optimism which saw U.S. stocks rise for five straight days last week for
the first time since July 2007, has all but evaporated amid renewed worries
about the global economy. The data expected out of the U.S. over the rest of
the week, culminating in Friday's closely-watched jobs report for November, is
expected to make for further grim reading.
"With so much gloomy economic news in circulation right now it's difficult to
see how the current mindset can be broken," said Matt Buckland, a dealer at CMC
Markets.
U.S. stock futures were pointing to some modest gains later. Dow futures were
up 124 points, or 1.5 percent, higher at 8,263 while the broader Standard &
Poor's 500 index, which dived 8.9 percent Monday, was up 14.10 points, or 1.7
percent, at 829.90.
Despite the recession which has taken hold across the developed world, some
companies are managing to post solid performances. One notable example was
British supermarkets chain Tesco PLC Tuesday, which saw its share price rise
around 7 percent after it reported like-for-like sales excluding revenues from
its gas pumps up 2 percent during the third quarter; including gas the total
was up 3.2 percent.
"Yet again Tesco has defied the laws of gravity kicking market recession fears
firmly in the teeth," said Howard Wheeldon, senior strategist at BGC Partners.
Tesco will be hoping that the widely-anticipated 1 percentage point rate
reduction Thursday from the Bank of England will help entice shoppers in the
crucial Christmas trading period ahead. The European Central Bank is also
expected to cut its benchmark rate by at least half a percentage point on
Thursday.
Earlier, Australia's central bank slashed its key interest rate Monday a full
percentage point to 4.25 percent in an attempt to prevent the economy from
sliding into recession. But investors took scant comfort from the move, sending
the benchmark S&P/ASX 200 index down 4.2 percent to 3,528.2.
Benchmarks in the Philippines, Taiwan, India and South Korea also dropped
sharply.
Markets on mainland China were mixed, with food processors up following a
lifting of price controls but banks down on economic jitters. The benchmark
Shanghai Composite Index slipped 0.3 percent, while the Shenzhen Composite
Index rose 1.4 percent.
The bleak outlook for the world economy drove oil prices to three-year lows,
with light, sweet crude for January delivery down $0.52 to $48.76 a barrel.
In currencies, the dollar was 0.1 percent lower at 93 yen, while the euro was
0.1 percent higher at $1.2621. The pound meanwhile, which slumped around 3.5
percent against the dollar Monday after dismal British manufacturing data, was
down another 0.1 percent at $1.4849.
The strength of the yen in particular is having a major impact on Japanese
stocks as the stronger currency erodes overseas earnings and makes Japanese
products more expensive for consumers abroad. Japan's top automaker, Toyota
Motor Corp., tumbled 4.1 percent, while Honda Motor Corp. dropped 6.9 percent.
Sony Corp. Sony Corp. fell 4.6 percent.