Shares Unsteady Amid Mixed China Data

Published February 1, 2012 9:09AM (EST)

SHANGHAI (AP) — World stock markets were mixed Wednesday, as a modest improvement in manufacturing data from China offered reassurance over its economic slowdown, though Asian markets fell back from early gains.

Benchmark oil hovered below $99 per barrel while the dollar rose against the euro but fell against the yen.

In early European trading, Britain's FTSE 100 advanced 0.8 percent to 5,724.91 and Germany's DAX both rose 1.1 percent at 6,525.76. France's CAC-40 jumped 1.3 percent to 3,340.45. Wall Street was set to open higher, with Dow Jones industrial futures rising 0.2 percent at 12,607 and S&P 500 futures gaining 0.2 percent at 1,310.40.

A better-than-expected Chinese manufacturing index for January, issued by a government federation, fueled an early rally in most markets across Asia. But that evaporated after the release later in the morning of a competing, seasonally adjusted survey by HSBC suggesting conditions were still deteriorating.

Tokyo's Nikkei 225 edged up less than 0.1 percent to close at 8,809.79. Hong Kong's Hang Seng was down 0.3 percent to 20,333.37 while Seoul's Kospi added 0.2 percent to 1,959.24.

By afternoon, shares in mainland China had retreated back into negative territory, with the benchmark Shanghai Composite Index shedding 1.2 percent to 2,268.08.

"Rumors that pension funds will not be invested in shares have raised worries over inadequate liquidity," said Cai Dagui, an analyst at Ping'an Securities, based in Shenzhen.

Shares will likely remain unstable as investors await annual earnings reports, he said.

The mixed signals from China compounded uncertainties over its outlook, showing that despite resilient consumer demand exports remain sluggish.

Such concerns are especially acute for Australia, whose economy has thrived on exports of coal, iron ore and other commodities to China.

Australia's S&P/ASX 200 fell 0.9 percent to 4,225.70, while India's Sensex edged 0.1 percent higher to 17,208.68.

Taiwan, Indonesia and New Zealand gained ground, though Singapore declined.

Overnight Tuesday, an unexpected drop in U.S. consumer confidence dragged shares down on Wall Street, where the Dow Jones industrial average lost 20.81 points, or 0.2 percent, to 12,632.91. The S&P slipped 0.60 point to 1,312.41 while the Nasdaq composite index rose 1.90 points to close at 2,813.84.

Overall, though, U.S. shares had their best start in 15 years, thanks to a modest improvement in the economy. Sentiment was further buoyed by hopes of progress in Europe after leaders there agreed on the broad outlines of a deal to tie the countries that use the euro closer together and on hopes that Greece is close to a debt-reduction deal with private creditors.

Benchmark oil for March delivery gained 38 cents to $98.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to end at $98.48 per barrel in New York on Tuesday.

In currencies, the euro fell to $1.3070 from $1.3084 late Tuesday in New York. The dollar fell to 76.16 yen from 76.20 yen.


Researcher Fu Ting contributed to this report.

By Salon Staff

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