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World stocks lower as dollar strengthens

PAMELA SAMPSON,Associated Press Writer

BANGKOK (AP) — World stocks fell Monday as investors took profits amid a steadier U.S. dollar and despite a strong earnings report from Internet search giant Google that helped push Japanese tech shares higher.

Oil prices fell below $81 a barrel as a monthlong rally lost momentum amid the dollar's moderate rise from recent lows. European bourses fell in early trading, and Dow futures were down 0.7 percent to 10,947.

The dollar's slight turnaround triggered a round of profit-taking that sent shares lower, according to Jackson Wong, vice president at Tanrich Securities in Hong Kong.

"The recent rally across the board, including commodities, was based on the weak dollar," Wong said. "The weak dollar almost forced investors to invest in riskier assets."

He added that the trend would probably continue until early next month, when the Federal Reserve is expected to take further steps to rejuvenate the flailing U.S. economic recovery.

In Europe, London's FTSE 100 was down 0.4 percent to 5,6810.92. Germany's DAX slid 0.2 percent to 6,476.210, while France's CAC-40 dropped 0.4 percent to 3,812.93.

In Tokyo, technology stocks rose after Google Inc. released solid financial results last week. Shares in the Mountain View, California-based Internet search giant soared 11 percent Friday after reporting the day before that third-quarter net income jumped 32 percent. But the overall Nikkei 225 stock average was flat, finishing at 9,498.49.

Chinese shares fell on massive profit-taking Monday, as caution set in after seven straight days of gains.

The benchmark Shanghai Composite Index lost 15.93 points, or 0.5 percent, to 2,955.23. The Shenzhen Composite Index for China's smaller, second exchange dropped 1.4 percent, to 1,196.23.

Major refiner Sinopec edged 0.3 percent lower to 9.37 yuan while oil and gas giant PetroChina fell 1.3 percent to 11.40 yuan.

"The market is adjusting by itself, but this will not change the upward trend in the mid-term," said Xiao Bo, an analyst at Huarong Securities, in Beijing.

Hong Kong's Hang Seng dropped 1.2 percent to 23,469.38. Banking heavyweight HSBC was down more than 2 percent — weighed down by U.S. financial stocks that have been affected by mortgage problems that could cost big banks billions.

Lurking mortgage problems left over from the collapse of the U.S. housing market sent bank stocks tumbling for a second day Friday. Bank of America Corp.'s stock hit a 52-week low and Wells Fargo & Co. tumbled nearly 5 percent. Shares of JPMorgan Chase & Co., Citigroup Inc. and other major mortgage players slid as well.

South Korea's Kospi slid 1.4 percent to 1,875.42. Australia's S&P/ASX 200 was off 0.8 percent at 4,651.9. Markets in Singapore, Taiwan, Indonesia and Malaysia were also lower.

Australian miners Rio Tinto Ltd. and BHP Billiton Ltd. were weak after scrapping plans for a $120 billion iron ore joint venture in the remote Outback after antitrust regulators in Australia, Europe and Asia opposed it or demanded changes.

On Wall Street, the Dow Jones industrial average finished Friday down 0.3 percent at 11,062.78. The broader Standard & Poor's 500 index rose 0.2 percent to 1,176.19. The tech-heavy Nasdaq jumped 1.4 percent to 2,468.77 after Google's results.

In currencies, the euro fell to $1.3841 from $1.3977. The euro had risen to $1.4100 on Friday. The dollar slipped to 81.28 yen from 81.43 yen after hitting a new 15-year low against the Japanese currency last week.

Benchmark oil for November delivery was down 51 cents to $80.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.44 to settle at $81.25 on Friday.

-- (c) Associated Press 2010-10-18

[asiawatcher]

I don't believe the USD has a future right now despite intervention of the FED and the banks talking it up. US is so far in debt it cannot trade out as it lacks too many of the necessities to do so. I would call in the receivers and throw the banks out! If you or I spend 1Baht more than our credit card limit we get chopped but it is ok for the US to keep spending because no-one set them a limit to their overdraft. They are out of credit and have no way to pay back what they owe. It will be interesting to see what new 'market' is created by Wall Street and the scam bankers to BS the world, the US is still okay.