World stocks down as Europe jobs data disappoints
BANGKOK (AP) — World stock markets slumped Friday after a report showed unemployment hitting an all-time high across the 17 European Union countries that use the euro.
Eurostat, the EU's statistics office, said Friday that unemployment rose to 12.2 percent in April from the previous record of 12.1 percent the month before.
European stocks fell in early trading. Britain's FTSE 100 fell 0.9 percent to 6,599.76. Germany's DAX lost 0.9 percent to 8,323.05. France's CAC-40 declined 1.1 percent to 3,952.50.
Wall Street also appeared headed for losses. Dow Jones industrial futures shed 0.5 percent to 15,237. S&P 500 futures dropped 0.6 percent to 1,643.40.
The dour European jobs figures came on top of lackluster U.S. economic reports Thursday that raised expectations the Federal Reserve will stick to its aggressive stimulus policies.
U.S. unemployment claims rose and first-quarter growth was revised lower, which in a perverse turn of events was encouraging for some investors who want to see the Fed continue its mammoth purchases of government bonds to support the U.S. economy.
The Fed's $85 billion-a-month purchases are aimed at keeping interest rates low to spur borrowing and investment. The efforts have boosted stock markets, where investors have turned for returns beyond what bonds are paying.
Asian stocks were mostly lower, although Japan's Nikkei 225 closed 1.4 percent higher at 13,774.54 after shedding more than 5 percent the previous day. South Korea's Kospi advanced 0.1 percent to 2,001.05. Australia's S&P/ASX fell 0.1 percent to 4,926.60. Benchmarks in New Zealand and the Philippines rose.
Hong Kong's Hang Seng fell 0.4 percent to 22,392.16. Benchmarks in Indonesia and Singapore fell.
On Thursday, U.S. economic growth in the first quarter was lowered to an annualized rate of 2.4 percent from 2.5 percent while weekly jobless claims rose by 10,000 and pending home sales gained by far less than anticipated in April.
Most economists think U.S. growth is slowing to around a 2 percent annual rate in the April-June quarter as the economy adjusts to federal spending cuts, higher taxes and further global weakness. Still, many say the decline may not be as severe as once thought. That's because solid hiring, surging home prices and record stock gains should keep consumers spending.
Traders are also keeping an eye on China. Its official manufacturing index for May is to be released on Saturday. A similar survey by HSBC Corp. issued last Thursday showed China's manufacturing contracted to a seven-month low of 49.6 from April's 50.4 on a 100-point index. Numbers below 50 show a contraction.
Andrew Sullivan of Kim Eng Securities in Hong Kong said traders were keeping their expectations in check for China, since as a huge exporter it is sensitive to global economic weakness.
"As long as it's not far off the 50 mark, I don't think people will be too worried," Sullivan said of the China manufacturing index.
Benchmark oil for July delivery was down 64 cents to $92.97 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 48 cents to close at $93.61 per barrel on the Nymex on Thursday.
In currencies, the euro was down at $1.2996 from $1.3043. The dollar fell to 100.40.