Saturday, October 26, 2013

China banking worries weigh on markets

LONDON (AP) — Worries over the Chinese banking sector weighed on markets Wednesday, a day after weak U.S. jobs data reinforced expectations that the Federal Reserve won't be reducing its monetary stimulus anytime soon.

News that the U.S. generated only 148,000 jobs in September, below the consensus among analysts for around 180,000, prompted stocks in Europe and the U.S. to rally. However, that momentum came to a grinding halt during the Asian trading session following a report that the amount of bad loans written off by China's largest banks swelled in the first half of the year.

"Yesterday's 'bad news is good news' interpretation of the U.S. non-farm payroll figures only carried the markets so far before they ran out of steam," said Alastair McCaig, market analyst at IG. "An Asian sell-off has dampened equity markets' enthusiasm."

In Europe, the FTSE 100 index of leading British shares was down 0.5 percent at 6,664 while Germany's DAX fell 0.4 percent to 8,911. The CAC-40 in France was 0.8 percent lower at 4,261.

Wall Street was poised for a lower opening, with both Dow futures and the broader S&P 500 futures down 0.5 percent.

Much of the focus later will be on the next batch of U.S. economic data as well as a raft of quarterly earnings updates from the likes of Boeing, Caterpillar and AT&T.

A solid earnings season has been one reason why the S&P has hit a series of record highs, along with delayed expectations of when the Fed will begin "tapering" its stimulus.

Max Cohen, a trader at Spreadex, says earnings have beaten analyst estimates at 74 percent of the 141 companies of the S&P that have released their results so far, while 53 percent exceeded sales projections.

Elsewhere, the dollar consolidated, particularly against the euro, after falling back in the wake of the payrolls figures — the euro was 0.1 percent lower at $1.3755, just shy of its near two-year high of $1.3793.

Earlier in Asia, China's Shanghai Composite Index fell 1.3 percent to 2,183.11 and Hong Kong's Hang Seng shed 1.4 percent to 23,999.95. Japan's Nikkei 225 tumbled 2 percent to 14,426.05 as the yen gained against the U.S. dollar, which can hurt sales and profits at Japanese exporters. Australia's S&P/ASX 200 fell 0.3 percent to 5,356.10.

Oil prices remained under pressure too, with the benchmark New York rate down $1.06 at $97.25 a barrel.

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