World stock markets were mixed Monday as early enthusiasm over China's $586 billion economic stimulus plan dissipated amid renewed worries about the world economy after U.S. electronics retailer Circuit City Stores Inc. filed for bankruptcy protection.
U.S. shares, which opened strongly following Friday's strong finish, were down. The Dow Jones index of leading shares fell 31.38 points, or 0.4 percent, to 8,912.43.
The losses on Wall Street prompted some selling in Europe before the close after earlier strong gains in the wake of the Chinese stimulus package.
The FTSE 100 index of leading British shares ended up only 38.96 points, or 0.9 percent, at 4,403.92, while Germany's DAX was 87.07 points, or 1.8 percent, higher at 5,025.53. France's CAC-40 was 36.63 points, or 1.1 percent, higher at 3,505.75.
Investors became increasingly concerned that the economic recession in the U.S. will be deeper than anticipated and could lead to some high-profile casualties.
"That's likely to hold any recovery somewhat in check," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors.
Those corporate concerns were stoked further Monday when Circuit City, the second biggest electronics retailer in the U.S., filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a financial reorganization plan.
Circuit City's woes come hot on the heels of General Motors Corp.'s warning Friday that it may run out of cash next year. GM _ one of the 30 companies that make up the Dow _ fell $1.06, or 24 percent, to $3.30.
Worries about the state of the world's largest economy took their toll on oil prices, which were sharply higher early in the session. By early afternoon New York time though, the cost of a barrel was down $0.75 cents at $60.29.
Earlier, the U.S. and Europe followed across the board increases in Asia as investors cheered, at least initially, China's unveiling of a massive 4 trillion yuan ($586 billion) stimulus package to help stave off much of the economic slowdown. The package involves a mix of spending, subsidies, looser credit policies and tax cuts.
However, enthusiasm for the package diminished through the day.
"The announcement is not as impressive as it sounds," said Capital Economics analyst Mark Williams. "No details have been given on how much of this spending would be new and the net increase is likely to be a lot less."
Other countries, including the U.S., are expected to unveil fiscal packages soon. British Prime Minister Gordon Brown used an interview on GMTV earlier to suggest that countries could use tax cuts or increase spending to pull themselves out of the downturn.
"What I am determined to do is to get all countries around the world trying to get their economies moving again and one way you can do that is by putting more money into the economy by tax cuts or by public spending rises," Brown said.
Earlier enthusiasm for the Chinese package helped Tokyo's Nikkei 225 stock average surge 498.43 points, or 5.8 percent, to 9,081.43, while Hong Kong's Hang Seng Index gained 501.20 points, or 3.5 percent, to 14,744.63.
In mainland China, where the benchmark Shanghai Composite Index has fallen by more than two-thirds since peaking October, the index soared 7.3 percent to 1,874.80. Markets in India, Australia, Singapore and South Korea joined the region's advance.
The dollar was down 0.3 percent, at 98.02 yen, while the euro was 0.4 percent higher at $1.2772.
___
AP Business Writers Madlen Read in New York Jeremiah Marquez in Hong Kong and AP reporters Elaine Kurtenbach in Shanghai and Shino Yuasa in Tokyo contributed to this report.
No comments:
Post a Comment