World stock markets mostly lower before key US jobs report; Nikkei plunges as yen strengthens

BANGKOK – World stock markets fell Friday as investors stayed on the sidelines ahead of a key U.S. jobs report later in the day.

Investors were also registering disappointment with the European Central Bank after it failed to fulfil hopes for a dramatic step to spark economic activity in the recession-mired region. Confusion about which direction the U.S. Federal Reserve might go with its bond-buying stimulus also kept investors edgy.

“I think market sentiment is still weak because there is still concern about what the next move of the Federal Reserve will be,” said Linus Yip, strategist at First Shanghai Securities in Hong Kong.

Britain’s FTSE 100 fell 0.2 per cent in early trading to 6,326.10. Germany’s DAX rose 0.1 per cent to 8,105.35. France’s CAC-40 was marginally higher at 3,816.41. Futures spelled losses on Wall Street. Dow Jones industrial futures shed 0.2 per cent to 15,012. S&P 500 futures lost 0.2 per cent to 1,620.20.

Fed chief Ben Bernanke has said the U.S. central bank might pull back on its $85 billion-a-month bond-buying program if economic data, especially hiring, improves. But other Fed officials have spoken about a winding down of asset purchases sooner. Stock markets, which have been pushed up by investors looking for returns that outpace bonds, might feel the pinch if the Fed scales back purchases that have kept interest rates low.

Japan’s Nikkei 225 index lost 0.2 per cent to close at 12,877.53 after the yen climbed against the dollar. That pummeled Japan’s exporters, which generally welcome a weaker currency to make products more competitive overseas. Isuzu Motors plunged 4.8 per cent. Yamaha Motor Ltd. sank 3.9 per cent. Toshiba Corp. dropped 3.4 per cent.

Hong Kong’s Hang Seng fell 1.2 per cent to 21,571.01. South Korea’s Kospi lost 1.8 per cent to 1,923.85. Australia’s S&P/ASX 200 shed 0.9 per cent to 4,737.70.

Later Friday, the U.S. Labor Department will release its employment report for May. The report is closely watched for signs of improvement in hiring, critical for an economy trying to pick up the pace of a sluggish recovery. A recent batch of weak manufacturing reports has also heightened concerns about the economy’s strength.

On Thursday, investors were disheartened by the lack of new initiatives from European Central Bank president Mario Draghi that might help boost ailing European economies.

Even though the ECB cut its 2013 growth and inflation forecasts for the 17-country euro currency grouping, Draghi said the governing council felt there was no reason to act now, especially as recent data suggest an improvement in the current gloomy economic conditions.

Analysts at Credit Agricole CIB in Hong Kong called the ECB’s pronouncements “fairly disappointing for anyone looking for some signal of more easing to come.”

Benchmark oil for July delivery was up 26 cents to $95 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.02 to close at $94.76 a barrel on the Nymex on Thursday.

In currencies, the euro was little changed at $1.3243 from $1.3245 late Thursday in New York. The dollar fell to 96.53 yen from 97.22 yen.


Follow Pamela Sampson on Twitter at