World markets inch up as Greek relief wears off

AP News
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Posted: Jul 01, 2011 7:39 AM
World markets inch up as Greek relief wears off

The euphoria that gripped markets after Greece passed cost-cutting measures to secure more bailout loans wore off Friday as investors focused on another batch of economic figures underlining the slowing global economic recovery.

Figures showed China's manufacturing sector growing at its slowest pace in more than two years in June in a further sign that the world's second largest economy is coming off the boil. Further downbeat news emerged in an equivalent survey in Britain.

The focus later will be on the monthly Institute for Supply Management survey of manufacturing conditions in the U.S. and the markets aren't too optimistic that they will show anything other than a slowdown in the U.S. recovery. The consensus in the markets is that the ISM's main index will drop to 52 in June from the previous month's 53.5, providing another sign of a faltering economy.

"With the small matter of Greece behind us for now investors can return their focus to more routine matters like economic data," said Michael Hewson, market analyst at CMC Markets.

In Europe, France's CAC-40 edged up 0.2 percent to 3,991, while Germany's DAX moved up 0.3 percent to 7,398. The FTSE 100 index of leading British shares rose 0.5 percent to 5,975.

Wall Street appeared headed for a similarly modest open. Dow futures were up 0.2 percent at 12,369, while the broader Standard & Poor's 500 futures was just 0.1 percent higher at 1,317.

Stocks have posted sizeable gains this week as investors first anticipated and then cheered the passage of austerity measures in the Greek Parliament. The planned measures to cut spending and raise taxes by euro28 billion ($40 billion) over the coming five years were required for the European Union and the International Monetary Fund to release the next euro12 billion ($17 billion) installment of bailout loans that are keeping Greece afloat.

Eurozone finance ministers are expected to rubber stamp their share of the next installment on Saturday night with the IMF following suit some time next week _ the finance ministers were initially planning to meet up in Brussels on Sunday but in a surprise development have opted to discuss the disbursement by video conference a day earlier.

The funds will see Greece through September, but the country is going to need another rescue in order to service its mountain of debt. A deal on another bailout is in the works, too, though an agreement is not expected imminently.

The euro has also been a big gainer as Greece bought more time. By early afternoon London time, it was up another 0.1 percent at $1.4483.

Earlier in Asia, Japan's Nikkei 225 index rose 0.5 percent to close at 9,868, while South Korea's Kospi index climbing 1.2 percent to 2,126. Markets in Hong Kong were closed for a public holiday.

Mainland Chinese shares were cool to the June manufacturing report, though some investors were apparently relieved to see the economy slowing since that will alleviate concerns over new monetary tightening measures to combat inflation that has dampened market sentiment for months.

The benchmark Shanghai Composite Index saw profit-taking erase earlier gains, edging 0.1 percent lower to 2,759.36, while the Shenzhen Composite Index added 0.5 percent to 1,162.07.

In the oil markets, prices were down with news that growth remains sluggish throughout the global economy. The main New York contract for crude was down 79 cents to $94.63 per barrel.

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Pamela Sampson in Bangkok contributed to this report.