European stocks down ahead of expected US sell-off
By PAN PYLAS
AP Business Writer
LONDON (AP) – European stock markets fell Wednesday ahead of an expected sell-off at the U.S. open, with worries about the economy resurfacing after a surprisingly upbeat start to the New Year.
The FTSE 100 index of leading British shares was down 83.18 points, or 1.8 percent, at 4,555.74, while Germany’s DAX fell 50.05 points, or 1 percent, to 4,976.26. France’s CAC-40 was 3.79 points, or 0.1 percent, lower at 3,392.43.
Earlier, Asian markets were mixed as Japan’s key index rose for a seventh day but Indian shares tumbled after the chairman of major outsourcing company Satyam Computer admitted to falsely inflating profits for years.
Wall Street futures were pricing in a lower opening at the bell. The Dow Jones industrial average futures were 67 points, or 0.8 percent, lower at 8,883 while the broader Standard & Poor’s 500 futures fell 7.10 points, or 0.8 percent, at 923.40.
Stock markets have started the New Year in sprightly mood on relief that 2008 has been left behind and amid hopes that the incoming Obama administration will unveil a near $800 million stimulus plan that may help limit the depth and breadth of the U.S. recession.
But a raft of economic news this week, most notably Friday’s U.S. jobs report for December, will likely provide markets with their first hurdles of 2009.
“Whether the current equity market rally has set the starting point of a prolonged bull market or represents just a bear market advance needs to be seen but there is always a wall of worry when new market trends are born,” said Hans Redeker, an analyst at BNP Paribas.
Indian investors were certainly filled with worry Wednesday. The Sensex index plunged more than 7.3 percent to 9,586.88 after Satyam’s chairman, B. Ramalinga Raju, said in a letter to the board released to the stock exchange that the company’s balance sheet was loaded with “fictitious” assets and “non-existent cash.”
Shares of Satyam Computer Services Ltd. crashed 78 percent to 40 rupees. The Securities and Exchange Board of India, the market regulator, said it was investigating the incident.
In Hong Kong, the benchmark Hang Seng sank 3.4 percent to 9,239.24 after Bank of America Corp. sold part of its stake in No. 2 lender China Construction Bank Ltd. for $2.8 billion, a move to raise cash amid the economic turmoil. Construction Bank shares dived 8.8 percent, dragging down most banking stocks.
Tokyo’s Nikkei 225 stock average rose 158.40 points, or 1.7 percent, to 9,239.24, as a weaker yen led investors to buy exporters. Honda Motor Co., Japan’s No. 2 carmaker, jumped 11 percent, Nikon Corp. soared 15 percent and Sony Corp. added 8.7 percent.
Elsewhere, South Korea’s Kospi gained 2.8 percent to 1,228.17, while benchmarks in Australia, Taiwan and the Philippines were higher by about 1 percent or more.
Oil prices were lower, with light, sweet crude for February delivery down 10 cents at $48.48 a barrel.
The dollar fell 0.5 percent to 93.20 yen, while the euro was 0.5 percent higher at $1.3582.
AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.
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