News like this could rattle the whole world. In as much as it is not said...much of the world is resting on what happens in China...
World stocks subdued after Chinese inflation jumpAP
Investors look at a stock price monitor at a private securities company AP – Investors look at a stock price monitor at a private securities company Wednesday, March 10, 2010 in …
By PAN PYLAS, AP Business Writer Pan Pylas, Ap Business Writer – 2 hrs 13 mins ago
LONDON – European and U.S. stock markets fell modestly Thursday amid growing concerns of an overheating Chinese economy and as investors awaited further insight into the state of the U.S. economic recovery.
In Europe, the FTSE 100 index of leading British shares closed down 23.31 points, or 0.4 percent, at 5,617.26 while the CAC-40 in France was 14.60 points, or 0.4 percent, lower at 3,928.95. Germany's DAX fell 8.09 points, or 0.1 percent, to 5,928.63.
Wall Street traded moderately lower too — the Dow Jones industrial average was down 9.07 points, or 0.1 percent, at 10,558.26 around midday New York time while the broader Standard & Poor's 500 index fell 1.51 point, or 0.1 percent, at 1,144.10.
"Financial markets are finely poised," said Kit Juckes, chief economist at ECU Group.
Juckes reckons that much will hinge on whether the S&P 500 can break through its previous high of 1,150 — on Wednesday, the S&P 500 closed up 5.16 points, or 0.5 percent, at 1,145.61.
"My bets, unchanged of late, are that equities break out to the upside," he added.
Stocks have not been jolted out of their current torpor by weekly jobless claims figures — the fall in the number of workers filing for unemployment benefits fell 6,000 to 462,000 last week, more or less in line with expectations.
More will come on Friday when U.S. retail sales and consumer sentiment figures, which should shine a light on the state of consumption in the U.S. The state of the U.S. consumer is particularly important for the U.S. economy as retail spending accounts for around 70 percent of the world's largest economy.
Earlier in Asia, worries about rising inflationary pressures in China reined in any buying momentum, though Japan's Nikkei 225 stock average gained 88.91 points, or 0.9 percent, to 10,653.70 as investors were boosted by a news report the government will soon upgrade its economic assessment for this year.
The markets are wary at the moment by concerns that the monetary authorities in China may start raising interest rates soon to keep a lid on mounting inflationary pressures — figures earlier showed that China's inflation rate jumped to 2.7 percent in February over a year earlier from 1.5 percent in January.
Any moves to raise the cost of borrowing in China or curb lending by Chinese banks will stoke concerns around the world that Chinese economic growth will slow down — one of the major reasons behind the global recovery from recession has been elevated growth levels in China.
"Global financial markets are worried about the prospect of tighter policy in China," said Mark Williams, an analyst at Capital Economics.
Though interest rate hikes, big increases to the required reserve ratio and loosening of the yuan's dollar peg are all likely in the months ahead, Williams said their economic impact should not be overplayed.
"They should not in themselves significantly slow growth in China, much less in the rest of the world," he added.
In Australia too, there was a break in the recent slew of positive economic news. The jobless rate edged up slightly to 5.3 percent in February, the first rise since peaking at 5.8 percent last October.
Hong Kong's Hang Seng gained 19.91 points, or 0.1 percent, to 21,228.20 while South Korea's Kospi shed 0.3 percent to 1,656.62. China's Shanghai benchmark added 0.1 percent to 3,051.28 and India's Sensex was up 0.2 percent.
Elsewhere, Australia's index fell 0.1 percent and Taiwan's market retreated 0.4 percent.
Oil prices fell with benchmark crude for April delivery down 4 cents to $82.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 60 cents to settle at $82.09 on Wednesday.
Currency markets were also subdued, with the euro up 0.1 percent at $1.3670 and the dollar flat at 90.50 yen.
