Stock gains limited by US fiscal cliff uncertainty

AP News
Posted: Nov 30, 2012 10:42 AM
Stock gains limited by US fiscal cliff uncertainty

LONDON (AP) — Uncertainty over whether U.S. leaders can resolve a critical budget deadlock and figures showing the unemployment rate across the 17-country eurozone at a record high kept a lid on markets Friday.

However, most stock indexes looked like they would be ending what's been another fairly strong week ahead. Investor sentiment had been buoyed this week by upbeat reports on the U.S. economy, including economic growth and consumer confidence, as well as a sense that U.S. politicians were making progress in the discussions over the budget.

The two sides need an agreement to avoid the so-called fiscal cliff of spending cuts and tax increases due to start Jan. 1 unless a deal is reached to cut the budget deficit. Failure to resolve the issue could push the U.S. economy, the world's largest, back into recession and seriously impact on global growth.

Republican House Speaker John Boehner on Thursday rebuffed a proposal by President Barack Obama because it lacked "sensible spending cuts." The tenor of the remarks suggested the hard bargaining was about to begin.

"Market swings this week have largely been due to the posturing of U.S. politicians as they battle for soundbites over the two parties' efforts to agree a cohesive plan of action in tackling the fiscal cliff," said Alastair McCaig, market analyst at IG.

By early afternoon in Europe, Britain's FTSE 100 was 0.4 percent higher at 5,894 while Germany's DAX rose 0.4 percent to 7,432. France's CAC-40 gained 0.4 percent to 3,582.

European markets were supported by news that the German parliament approved the latest bailout deal for Greece, which cuts the country's debt burden and gives it new rescue loans. However, optimism was blunted by new statistics showing unemployment in the 17 EU countries that use the euro rose to a record high of 11.7 percent in October.

While the rise in the jobless rate was largely anticipated, it highlights the dire state of the currency bloc's economy.

Wall Street was more cautious on the open, with the Dow up 0.2 percent to 13,047 and the S&P 500 0.1 percent higher at 1,417.

Earlier, in Asia, Japan's Nikkei 225 index rose 0.5 percent to close at 9,446.01 after the Japanese government released an 880.3 billion yen ($10.7 billion) stimulus package.

Hong Kong's Hang Seng added 0.5 percent to 22,030.39 and Australia's S&P/ASX 200 advanced 0.6 percent to 4,506. South Korea's Kospi fell 0.1 percent to 1,932.90. Benchmarks in Taiwan, Singapore, mainland China and New Zealand also rose. Indonesia fell.

Benchmark oil for January delivery was up 34 cents to $88.41 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to close at $88.07 on Thursday on the Nymex.

In currencies, the euro rose to $1.3004 from $1.2972 Thursday in New York. The dollar rose to 82.50 yen from 82.15 yen.


Pamela Sampson in Bangkok contributed to this report.