Quantcast

World stocks steady after US growth figures

By Pan Pylas

Associated Press

Published: Wednesday, Dec. 22 2010 8:33 a.m. MST

A businessman runs past an electric board showing global stock price indexes, at a securities' firm in Tokyo, Japan, Tuesday, Dec. 21, 2010. Japan's Nikkei 225 stock average climbed 1.5 percent to 10,370.53 after the Bank of Japan kept monetary policy unchanged at the current super loose setting after a key survey last week showed deteriorating business sentiment.

Koji Sasahara, Associated Press

Enlarge photo»

LONDON — Global stocks held steady Wednesday as modestly lower-than-expected U.S. growth figures for the third quarter did little to alter views that the world's largest economy is gaining steam.

In Europe, the FTSE 100 index of leading British shares was up 26.08 points, or 0.4 percent, at 5,977.88 while Germany's DAX fell around a point to 7,076.70. The CAC-40 in France was up about a point at 3,028.56.

On Wall Street, the Dow Jones industrial average was up a little more than 4 points at 11,537.28 soon after the open while the broader Standard & Poor's 500 index rose just under 2 points to 1,246.47.

The response to figures showing that the U.S. economy grew at an annualized rate of 2.6 percent in the third quarter was muted. Though the rate was up on the 2.5 percent previously reported, it was below expectations for a bigger rise to 2.8 percent.

The figure did not spook investors following a strong run in stock markets around the world, particularly in the U.S. where on Tuesday the S&P closed at its highest level since the trading day before Lehman Brothers collapsed in September 2008. The Dow ended at its highest since August 2008.

The growth figures have not altered the prevailing view in the markets that the U.S. economic recovery is gaining traction, partly thanks to a recent deal to extend tax cuts to all Americans.

That sentiment was reinforced by figures from the National Association of Realtors showing that sales of previously occupied homes spiked by 5.6 percent during November. Though sales are at extremely low levels, the increase represents the third rise in four months.

Further insight will be sought on Thursday when a number of key economic releases are due — particularly durable goods orders for November and the University of Michigan's assessment of consumer confidence in the crucial month of December.

Once they're out of the way, traders will be preparing for the Christmas break, with many off until the new year. Christmas Eve on Friday is a holiday in the U.S. and Germany, and a half day in Britain and France.

"Tomorrow's barrage of U.S. data ahead of the holiday weekend is likely to provide ample fodder for traders," said Michael Woolfolk, an analyst at Bank of New York Mellon.

The dollar continued to garner strength through the day, particularly after the data releases — by mid afternoon London time, the euro was down 0.1 percent at $1.3083.

Earlier, the euro had been buoyed by reports that China is planning to buy €4.5 billion worth of Portuguese debt but nagging concerns over the European debt crisis after further warnings from credit rating agencies capped the gains.

"Whether Chinese support for first Greece and now Portugal will be enough to draw an end to this year's drama for the euro remains to be seen, but I doubt it will," said Andrew Wilkinson, senior market analyst at Interactive Brokers.

On Tuesday, Moody's Investor Services warned that Portugal may have its rating cut in coming months, while rival Fitch indicated that it may slash its rating on bailed-out Greece to so-called junk status by the end of January. Standard & Poor's and Moody's have already cut their rating on Greece to non-investment grade.

"The moves add to the sense of deterioration in the eurozone and fuel further speculation about possible outcomes to the crisis," said Robert Ryan, an analyst at BNP Paribas. "Investors do not like uncertainty and this will continue to weigh on the euro."

Elsewhere, news that the British economy grew by a slightly less than anticipated quarterly rate of 0.7 percent during the third quarter had little market impact, partly because the minutes to the last policy meeting at the Bank of England came across as modestly more hawkish than expected.

Earlier in Asia, Chinese shares fell on profit-taking, with the benchmark Shanghai Composite Index losing 0.9 percent to 2,877.90. The Shenzhen Composite Index for China's smaller, second market slipped 0.8 percent to 1,338.20.

Japan's Nikkei 225 stock average closed down 0.2 percent to close at 10,346.48 after being higher for most of the day.

Hong Kong's Hang Seng index rose 0.2 percent to finish at 23,045.19, South Korea's Kospi advanced less than 0.1 percent to end at 2,038.11 and Australia's S&P/ASX 200 added 0.1 percent to close 4,778.40.

Benchmark oil for February delivery rose 62 cents to $90.44 in electronic trading on the New York Mercantile Exchange. The contract rose 45 cents to settle at $89.82 on Tuesday.

AP Business Writer Kelvin Chan in Hong Kong contributed to this report.

Get The Deseret News Everywhere

Subscribe

Mobile

RSS