World markets pull back after banner week

AP News
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Posted: Mar 19, 2012 1:25 PM
World markets pull back after banner week

Stock markets were subdued Monday as high oil prices weighed on hopes for the global economic recovery and offset any cheer generated by the news that Apple Inc. will pay its first dividend since 1995 and start a $10 billion buyback program.

The benchmark New York oil contract rose another 59 cents to $107.63 a barrel, keeping a lid on stock market sentiment as investors worry the increase in energy costs will hurt consumer spending and dent company earnings. Over the weekend Christine Lagarde, the managing director of the International Monetary Fund, said the high cost of crude was a key risk for the world economy.

"Higher oil prices are a tax on the consumer but at this stage of the global economic cycle, when activity is generally cooling, they also represent a stagflationary risk," said Neil MacKinnon, global macro strategist at VTB Capital.

In Europe, the CAC-40 in France fell 0.5 percent to 3,577, while Germany's DAX was broadly unchanged on the day at 7,154. The FTSE index of leading British shares pulled back 0.07 percent to 5,961.

On Wall Street, the Dow Jones industrial average was up 0.1 percent at 13,257 while the broader S&P 500 index rose 0.1 percent to 1,412.

Apple Inc. was the main focus of attention in U.S. markets, trading 2.35 percent higher at $599.28, after it said it would use up a chunk of its $98 billion cash cash pile to pay a special dividend and to enact a share buyback.

Over recent weeks, stocks have been buoyant on a combination of hopes over the U.S. economic recovery and Europe's debt crisis _ U.S. markets have led the advance to trade at their highest levels since the collapse of Lehman Brothers in 2008.

On Monday, however, investors were reluctant to buy into stocks much more.

"Momentum has struggled in recent days, in spite of improving U.S. news and a general easing of tensions in the eurozone, as investors try to weigh up whether stock indices can push on much more from their recent highs," said Chris Beauchamp, market analyst at IG Index.

Earlier in Asia, Hong Kong's Hang Seng Index fell 1 percent to 21,115.29. Benchmarks in Singapore, Taiwan and Indonesia fell.

Other Asian indexes finished slightly up. Japan's benchmark Nikkei 225 closed 0.1 percent higher at 10,141.99.

In mainland China, the benchmark Shanghai Composite Index gained 0.2 percent to 2,410.18. The Shenzhen Composite Index rose 1.1 percent to 993.75.

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Sarah DiLorenzo in Paris and Pamela Sampson in Bangkok contributed to this report.