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Thursday, June 14, 2012 - Page updated at 01:30 a.m.
World stocks struggle as crisis fears weigh
By KELVIN CHAN
AP Business Writer
World stocks struggled to stay above water in choppy trading on Wednesday, as persistent worries over Europe's ability to contain a simmering debt crisis tempered optimism following talk of more stimulus for the U.S. economy.
Some markets zigzagged between gains and losses as investors weighed comments by a Federal Reserve official in support of more measures to stimulate the economy against the situation in Europe.
In early European trading, the FTSE 100 index of leading British companies rose 0.3 percent to 5,488.84 while Germany's DAX was nearly flat at 6,161.24. France's CAC 40 retreated 0.1 percent to 3,043.97 after briefly turning positive.
U.S. stocks were poised to fall. Dow futures lost 0.1 percent to 12,500.00 while broader S&P 500 futures dropped 0.2 percent to 1,317.70.
In Asia, Japan's Nikkei 225 index gained 0.6 percent to close at 8,587.84, after machinery orders rose 5.7 percent to the highest level in four years, Kyodo reported.
South Korea's Kospi swung temporarily into negative territory in early trading before closing 0.2 percent higher at 1,859.32. Hong Kong's Hang Seng also briefly dipped before rising 0.8 percent to 18,026.52.
Australia's S&P/ASX 200 fell 0.2 percent to 4,063.80. Benchmarks in New Zealand and Singapore fell but Taiwan's rose.
Mainland Chinese shares rose on hopes authorities would bring in more economy-boosting measures. The benchmark Shanghai Composite Index added 1.3 percent to 2,318.92 while the smaller Shenzhen Composite Index gained 1.8 percent to 959.11. Shares in biotechnology, insurance and power-related companies led the gains.
"There is some room for gains after the earlier losses, and investors are expecting more positive monetary policies in the short term, even if the outlook is not so good in the longer term," said Zhang Yang, an analyst at Sinolink Securities, based in Shanghai.
Speculation that regulators may ease limits on insurers' investments helped buoy China Life Insurance, China's biggest insurance company, which gained 7.2 percent.
Huaneng Power International, one of several big electricity generators, gained 5.7 percent on expectations that lower coal prices will boost utilities' profits, Zhang said.
Conditions in Europe continued to weigh.
In Spain, ratings agency Fitch downgraded 18 banks and the government's borrowing costs rose again Wednesday after peaking the day before at the highest level since adopting the euro currency. Investors are worried that a European bailout for Spain's banks won't solve the country's problems amid fears that the contagion could spread to Italy. In Greece, investors are nervously looking ahead to an election on Sunday to see if a party that has vowed to throw out the country's bailout agreement will win.
U.S. stocks, meanwhile, staged one of their strongest rallies of the year after Charles Evans, president of the Fed's Chicago bank, told Bloomberg News he supported action to produce faster job growth.
"Even though the U.S. market rose strongly overnight because of the anticipation of quantitative easing, the market still in Asia is not convinced of the recovery," said Francis Lun, managing director of investment firm Lyncean Holdings Ltd. "So investors are very timid and dare not buy in the market right now."
Esprit Holdings Ltd. plummeted 21 percent in Hong Kong trading before being suspended after the clothing chain said chief executive Ronald van der Vis resigned for personal and family reasons. It's another sign of trouble at Esprit, which has been struggling amid shrinking demand in its biggest market, Europe.
Benchmark oil for July delivery was up 19 cents to $83.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 62 cents to finish at $83.32 on Tuesday.
In currencies, the euro strengthened to $1.2519 from $1.2498 late Tuesday in New York. The dollar rose to 79.56 yen from 79.49 yen.
AP researcher Fu Ting in Shanghai contributed to this report.
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