Upbeat US survey helps stocks clamber off lows

AP News
Posted: Mar 01, 2013 10:40 AM
Upbeat US survey helps stocks clamber off lows

AMSTERDAM (AP) — Upbeat U.S. manufacturing figures Friday helped ease the selling in stock markets and gave the dollar a further boost despite nervousness over the prospect of impending spending cuts by the U.S. government.

Some $85 billion in cuts are due to take effect today as part of a previous budget agreement between the White House and Congress. The planned "sequester" could hit U.S. growth if no deal is reached to avoid it. The International Monetary Fund has estimated that it could shave around 0.5 percentage point off U.S. growth this year.

Some of those concerns were eased, or at least deflected, by a survey showing U.S. factory activity expanded in February at the fastest pace in 20 months. The Institute for Supply Management said its index of factory activity rose last month to 54.2, up from January's 53.1. A reading above 50 indicates expansion.

"This is exactly what the equity market needed since it was showing a little vulnerability, not least around fears over the sequester," said Alan Ruskin, an analyst at Alpari.

In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 6,344, while Germany's DAX fell 0.8 percent to 7,678. The CAC-40 in France was 1.2 percent lower at 3,677.

On Wall Street, the Dow Jones industrial average was down 0.4 percent at 14,000 while the broader S&P 500 index fell 0.5 percent at 1,507.

Stocks had earlier been weighed down by weaker than anticipated Chinese and European figures, including the news that unemployment in the 17-country eurozone rose in January to a record 11.9 percent.

The ISM survey also shored up the already buoyant dollar. The euro was down 0.7 percent at $1.2974, its first foray below $1.30 for nearly two months. The dollar was also 0.7 percent higher at 93.22 yen.

The U.S. survey contrasted with equivalent surveys for Europe and China, which weighed on trading earlier.

In particular, a weak British manufacturing survey hit the British pound hard. It was trading 1.1 percent lower at $1.4997, its first fall below $1.50 since July 2010.

Earlier in Asia, Tokyo's Nikkei 225 stock index gained 0.4 percent to 11,606.38 on expectations that the Bank of Japan will push ahead with more drastic monetary easing under its future new governor, Haruhiko Kuroda. He requires parliamentary approval, before he succeeds current BOJ governor, Masaaki Shirakawa, when he steps down on Mar. 19.

Elsewhere in Asia, markets were lower as China's manufacturing grew at its weakest rate in five months in February as demand faltered and factories shut down for the Lunar New Year holiday.

Hong Kong's Hang Seng dropped 0.6 percent to 22,880.22. Australia's S&P/ASX 200 shed 0.4 percent to 5,086.10. South Korean markets were closed for a public holiday. Mainland China's benchmark fell 0.3 percent to 2,359.51.

Benchmark crude for April delivery fell $1.36 to $90.69 a barrel in electronic trading on the New York Mercantile Exchange.


AP Business Writer Elaine Kurtenbach contributed to this story from Tokyo.