World stocks lower after big sell-off

AP News
Posted: May 24, 2013 10:19 AM
World stocks lower after big sell-off

MOSCOW (AP) — World stocks edged lower on Friday, a day after markets around the world dropped sharply on concerns global growth is slowing and the Federal Reserve could start scaling back its monetary stimulus.

Japan's Nikkei, which had led the previous day's losses with a plunge of over 7 percent, seesawed throughout Friday before closing 0.9 percent higher at 14,612.45.

In Europe, stocks trended lower Friday afternoon following modest gains in the morning. Britain's FTSE 100 shed 0.6 percent 6,659 points while France's CAC-40 declined 0.2 percent at 3,959.04.

Germany's DAX followed the suite, dropping 0.6 percent to 8,282.68 despite upbeat economic indicators. The Ifo index of business confidence and the GfK survey of consumer optimism both rose, according to surveys released on Friday, suggesting Europe's largest economy will pick up in the second quarter.

Analysts said traders are mainly looking for more clues on what policymakers in Europe and the U.S. will do to support economic growth.

"The market will likely stabilize as investors wait for more clarity on the data front to gauge the next policy moves," Anthony Lam at Credit Agricole said in a morning note to investors.

Wall Street was muted on opening in spite of latest figures from the Commerce Department showing an increase of 3.3 percent in durable goods orders for April from the previous month.

The Dow Jones industrial average dropped 0.4 percent to 15,238.43 while S&P 500 slipped 0.5 percent to 1,642.99.

Trading volumes are likely to be somewhat limited on Friday as investors in the U.S. and Britain prepare for a long holiday weekend, with their markets to remain closed on Monday.

The previous day's market drops had been triggered in part by the suggestion that Federal Reserve might start easing its bond-buying program soon. The Fed is buying $85 billion worth of bonds every month as part of its stimulus program. That has kept interest rates low and encouraged investors to put money into stocks and other risky assets. If the Fed slows down its bond purchases, it could lead to an outpouring of money from stocks, investors fear.

Also, a weak survey on China's manufacturing sector had shaken Asian indexes. Japan's index dropped the most, partly because it has enjoyed a massive rally over the past six months and some investors found it a good time to cash out.

Elsewhere in Asia, South Korea's Kospi added 0.2 percent while Hong Kong's Hang Seng dropped 0.2 percent. Australia's S&P/ASX 200 tumbled 1.6 percent.

Investors in Asia acted nervously on Friday after Federal Reserve meeting minutes showed some of its policy makers want the U.S. central bank to start withdrawing its monetary stimulus.

Benchmark oil for July delivery declined $1.02 to $93.20 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 3 cents to close at $94.25 per barrel on the Nymex on Thursday.

In currencies, the euro rose to $1.2939 from $1.2974 late Thursday in New York. The dollar weakened to 101.68 yen from 101.91 yen.


AP Business Writer Pamela Sampson contributed to this report from Bangkok.