World stocks mixed amid Spain fears12/06/2012 - 10:41:02
World stock markets were mixed today as enthusiasm for a European plan to rescue Spain's teetering banks turned to scepticism.
An offer by the 17 countries that use the euro to loan Spain up to €100bn to revive banks crushed by bad property loans was initially met with euphoria, driving markets up yesterday.
But concerns have quickly grown that the rescue is a sticking plaster which will not stop Spain's severe economic problems getting worse.
A further deterioration in Spain's situation would intensify the broader European debt crisis that is dragging on world growth.
European stocks rose in early trading after slumping a day earlier. Britain's FTSE 100 inched up 0.2% to 5,440.85, Germany's DAX added 0.5% to 6,152.13 and France's CAC-40 was 0.4% higher at 3,055.72.
Wall Street appeared headed for a mixed opening. Dow Jones industrial futures rose 0.6% to 12,381 while S&P 500 futures fell 1.1% to 1,307.50.
Asia shares fell as investors took cues from a choppy day of trading in the US that ended with losses on major stock indexes.
Japan's Nikkei 225 index lost 1% to close at 8,536.72, South Korea's Kospi dropped 0.7% to 1,854.74 and Hong Kong's Hang Seng was 0.4% lower at 18,872.56.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index shedding 0.5% to 2,289.79 and the Shenzhen Composite Index lost 0.4% to 942.18.
Spain became the fourth European nation to seek a rescue, after Greece, Portugal and Ireland. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Italy's government confirmed yesterday that the country's recession is deepening. The economy contracted at a quarterly rate of 0.8 % in the first three months of the year, the worst contraction in three years and double Spain's rate.
Some of the uncertainty spooking markets might be put to rest on Sunday, when Greece holds an election that could determine whether Athens will remain in the euro.
Linus Yip, a strategist at First Shanghai Securities in Hong Kong, said European financial institutions and other parties with an interest in the outcome had time to prepare and so the election might not destabilise markets.
"I think it will be OK. You can see every party is already doing the emergency planning, the European Central Bank is preparing," he said. "The market has regained confidence gradually. The euro had a good rebound last week."
Still, markets remained jittery over China's economic slowdown. A large steelmaker in China, Baoshan Iron & Steel, said it lowered steel prices as demand from makers of appliances and cars slowed. Shanghai-listed Baoshan fell 3.3%.
The news sent other Asian steelmakers lower - Japan's Nippon Steel sank 2.9% and South Korea's Posco fell 1.9%.
Shares in Chinese environmental protection, steel and coal mining weakened, while property rose. Poly Real Estate, China's second-largest listed developer, gained 4%.
"Investors are expecting the authorities to relax controls on the real estate market," said Guo Yanhong, an analyst at Huachuang Securities based in Beijing.
Qantas Airways soared 10.8% in Sydney after Dubai-headquartered Emirates said it had talked to the Australian flag carrier about a commercial partnership, possibly a code-share arrangement.
Benchmark oil for July delivery was down 79 cents to $81.89 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 1.40 dollars to finish at $82.70 per barrel in New York yesterday.
Among currencies, the euro rose to $1.2506 from $1.2498 in New York late yesterday. The dollar rose to 79.59 yen from 79.44 yen.