European stocks steady ahead of Wall Street open

AP News
Posted: Nov 13, 2009 8:34 AM

European stock markets awaited direction from Wall Street on Friday despite the news that the recession in the 16-country eurozone was over.

The FTSE 100 index of leading British shares was almost unchanged, down less than a point at 5,275.92 while Germany's DAX fell 12.94 points, or 0.2 percent, to 5,651.02. The CAC-40 in France was 10.64 points, or 0.3 percent, lower at 3,797.43.

Meanwhile in the U.S., Dow futures were 14 points, or 0.1 percent, higher at 10,203 while the broader Standard & Poor's 500 futures rose 2.1 points, or 0.2 percent, at 1,089.40.

On Thursday, U.S. stocks fell by 1 percent as oil prices tumbled and the dollar continued to clamber off recent lows.

"As it stands right now, it would be of little surprise to see something of a sideways drift into the weekend break," said David Jones, chief market strategist at IG Index.

Many analysts think stocks may claw out more gains if the S&P 500 can close about the 1,100 mark. Despite several attempts this week, it has not been able to sustain a break above that level through the end of the session.

"The question investors are asking now is whether we can eventually push higher...or whether recent congestion is a sign that the rally higher is over," said Geoffrey Yu, an analyst at UBS.

Stocks have rallied strongly since March's lows with many of the world's major indexes trading at, or near, their highest levels this year as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound.

News that the 16-country eurozone emerged from recession in the third quarter did little to excite investors as the 0.4 percent quarterly rise was less than many had been anticipating, and as growth in some major economies fell short of forecasts. With a rebound in exports partially offset by weak household spending, Germany's economy grew by 0.7 percent and France's by 0.3 percent.

Still, the third quarter rise in eurozone output was the first in six quarters and brings to an end Europe's sharpest recession since World War II. Though the eurozone's banks were not at the epicenter of the financial crisis that triggered the global economic downturn, the region suffered as demand for its high-value products fell off a cliff.

Investors also didn't get too excited by the planned merger of British Airways PLC and Spain's Iberia. Both stocks were up only around 2 percent, though they had rallied strongly in the run-up to the announcement.

Earlier, Asian markets closed mixed amid investor uncertainty about the global outlook after Wall Street's losses on Thursday.

Tokyo's Nikkei 225 fell 34.18 points, or 0.4 percent, to 9,770.31 while Seoul's Kospi was off 0.1 percent at 1,571.99. Singapore's market traded flat, while Sydney shed 0.8 percent.

Among rising markets, China's benchmark Shanghai Composite Index added 0.5 percent to 3,187.65, and Hong Kong's Hang Seng recouped its early losses to gain 0.7 percent to 22,553.63.

Oil prices continued to fall in the wake of Thursday's soft U.S. inventory data. Benchmark crude for December delivery was down 27 cents at $76.67 in electronic trading on the New York Mercantile Exchange. The contract tumbled $2.34 to settle at $76.94 on Thursday.

The euro was 0.2 percent higher at $1.4871. Despite the modest advance, the euro is still a ways down from levels earlier this week, when it nearly broke above its 15-month high of $1.5061.

The dollar was 0.6 percent down at 89.76 yen.


Associated Press Writers Louise Watt in London and Joe McDonald in Beijing contributed to this report.