Friday, April 15, 2011

World stocks lower as Chinese inflation up again

HONG KONG (AP) - Stock markets were mostly lower Friday after China reported inflation climbed again despite government efforts to control living costs, raising fears among investors that the government will take further measures to cool the country's thundering economic growth.

Oil prices hovered fell below $108 a barrel Friday in Asia as traders mulled a weaker U.S. dollar and signs of strong global crude demand to justify a two-month rally. In currencies, the dollar was down against the yen but higher against the euro.

In early European trading, the FTSE 100 index of leading British shares was up 0.1 percent at 5,969 while Germany's DAX edged up 0.3 percent to 7,168.94. The CAC-40 in France dropped 0.2 percent to 3,964.38.

U.S. stocks were poised to fall. Dow futures were down 0.2 percent to 12,208. Broader S&P 500 futures were down 0.2 percent to 1,307.80.

Hong Kong's Hang Seng Index fell less than 0.1 percent to close at 24,008.07. China's Shanghai Composite Index spent much of the day in the red before staging a late rally to finish 0.3 percent higher at 3,050.53.

Japan's Nikkei 225 stock average fell 0.7 percent to end at 9,591.52. South Korea's Kospi was down less than 0.1 percent to close at 2,140.50 and Australia's S&P/ASX 200 was down 0.6 percent to finish at 4,853.60. Benchmarks in Singapore and India were also lower. Benchmarks in Indonesia and the Philippines were higher.

Data released Friday showed that Chinese consumer prices rose 5.4 percent over a year ago, driven by surging food costs. That's up from February's 4.9 percent increase and was a setback for communist leaders who have boosted interest rates four times since October and taken other steps to cool prices.

Chinese and Hong Kong stocks fell after the report was released as investors realized inflation is still quite high and will likely trigger another interest rate hike soon, said Jackson Wong, a vice president at Tanrich Securities.

The number is "way above Premier Wen's target (of 4 percent), so I believe usually what China's government will do when the number is far off from the target is they will try to make a big dose of tightening to make it go down," Wong said.

Trading volume was thin at the end of the week as investors stayed on the sidelines in the absence of any other big news.

In Japan, shares of Toyota Motor Corp. fell 0.9 percent after the world's biggest automaker said output would be kept at half capacity from May 10 to June 3 amid a supply crunch following the tsunami disaster. Toyota shares have lost nearly 10 percent since the disaster struck March 11.

Indian shares fell as disappointed investors sent Infosys Technologies shares down 7 percent after the company reported that quarterly profit missed expectations because higher expenses squeezed margins.

In currencies, the dollar slipped to 83.18 yen from 83.73 yen late Thursday. The euro fell to $1.4467 from $1.4503.

Benchmark oil for May delivery fell 31 cents to $107.79 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.00 to settle at $108.11 per on Thursday.



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