Concerns Over Growth And Europe Push Markets LowerAugust 22nd, 2012 10:45 am Associated Press
LONDON (AP) — Concerns over economic growth pushed global markets down on Wednesday, with investors watching meetings between Greek and European leaders for signs the country will get more time to meet its debt reduction targets.
Sentiment took a hit after some major corporations — such as BHP Billiton, the world’s biggest mining company — reported lower earnings due to weaker global demand and Japan said it fell back into a trade deficit in July as exports dropped.
In early European trading, the FTSE 100 index of leading British shares lost 1.1 percent to 5,795.81 while Germany’s DAX dropped 0.8 percent to 7,034.02. France’s CAC 40 slipped 0.7 percent to 3,490.09.
Major Asian indexes like Japan’s Nikkei closed lower and Wall Street was poised to fall as well. Dow futures were down 0.1 percent to 13,180 while broader S&P 500 futures slid 0.3 percent to 1,409.
Besides BHP, Chinese car maker Geely Automobile Holdings Ltd. said first-half profit was flat and trading conditions in the world’s biggest auto market in the second half of 2012 “are expected to be more challenging.” Its shares plunged 5.9 percent in Hong Kong.
“Slower economic growth is a general risk for shares,” said Xu Xiaoyu, an analyst at China Investment Securities in Beijing. “The market will keep on being unstable. There is no support for the market to rise in the next few months.”
Adding to signs of a global slowdown in growth, Japan posted a 517.4 billion yen ($6.5 billion) trade deficit in July, compared with a surplus the year before, as exports fell 8 percent. Exports of autos and electronics by Asia’s second-biggest economy have been hurt by the strengthening yen as well as weak demand from Europe.
Europe’s financial crisis will remain a pressure point for investors. Greece’s prime minister will meet several European counterparts this week, starting Wednesday, as he seeks to get more wiggle room on enacting painful reforms and spending cuts.
Antonis Samaras was quoted in an interview published Wednesday that he wants more time to carry out the measures, possibly setting the stage for confrontation with Germany, which has grown impatient with delays.
Samaras is expected to plead his case when he meets Luxembourg Prime Minister Jean-Claude Juncker, who chairs the eurozone finance ministers’ meetings, in Athens later Wednesday. Samaras heads to Berlin and Paris on Friday and Saturday for talks with German Chancellor Angela Merkel and French President Francois Hollande.
Greek officials are preparing €11.5 billion ($14.2 billion) in spending cuts the country needs to carry out in order to receive rescue loans protecting it from bankruptcy.
“With the Greek PM’s meetings kicking off later today, eyes will likely remain on Europe,” strategists at Credit Agricole CIB wrote in a research note. “Given plenty of event risks, investors are likely to turn cautious.”
Earlier, Japan’s Nikkei 225 index shed 0.3 percent to close at 9,131.74, while South Korea’s Kospi dropped 0.4 percent to 1,935.19. Hong Kong’s Hang Seng fell 1.1 percent to 19,887.78, while Australia’s S&P/ASX 200 dipped 0.2 percent to 4,376.00.
In mainland China, the Shanghai Composite Index slid 0.5 percent to 2,107.71. The smaller Shenzhen Composite Index lost 0.7 percent to 884.73.
Benchmarks in Singapore, Taiwan, New Zealand, Thailand and the Philippines also fell.
Crude oil fell 18 cents to $96.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 71 cents to settle at $96.68 per barrel in New York on Tuesday.
In currencies, the euro rose to $1.2470 from $1.2467 late Tuesday in New York. The dollar was up to 79.28 Japanese yen from 79.42 yen.
Kelvin Chan in Hong Kong and Fu Ting in Shanghai contributed to this report.