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European earns weigh on stocks; Asia down

European earns weigh on stocks; Asia down

European stocks dropped Wednesday, weighed down by earnings reports from companies including German business software maker SAP, which cut its sales forecast.
In morning trading in Europe, Britain's FTSE 100 fell 1.5 percent to 5,124.06, Germany's DAX shed 1.5 percent to 5,553.44 and France's CAC 40 lost 1.3 percent at 3,696.36.
Major Asian markets fell by about 1.5 percent or more and Wall Street was expected to dip on the open as signs American consumers were struggling undermined hopes for a stronger turnaround in the world's largest economy.
In Europe, SAP AG said third-quarter net income rose 12 percent, as a drop in revenue was partly offset by a lower tax rate and better profit margins. But a negative outlook sent its shares down 7 percent. The company said it expects software and related service revenues to decline by about 6 percent to 8 percent for the full year. Earlier this year, the company had suggested a drop of between 4 percent and 6 percent.
Banking shares declined, including Banco Santander, whose third-quarter profits remained flat, with increased loan losses weighing on the bottom line despite improving business in Britain. Shares in Spain's largest bank fell 3.5 percent.
"For the moment financial markets have clearly stagnated, with a realization hitting home that all the warnings of a return to growth being a long and painfully slow process are not just hot air," said David Jones, chief market strategist at IG Index.
Wall Street was set to open lower. Dow Jones industrial average futures slipped 0.4 percent to 9,800 and Standard & Poor's 500 futures were 0.4 percent lower at 1,055.80. Investors were bracing for more U.S. corporate earnings reports, as well as U.S. durable goods figures for September, due at 1230 GMT (8:30 a.m. EDT).
Asia's losses followed a choppy session on Wall Street Tuesday, where an unexpected drop in consumer confidence gave investors few reasons to venture further into a market that's run massively higher in the last eight months.
The news was the latest evidence that U.S. shoppers, their budgets tightened by the economic crisis and rising unemployment, aren't likely to return to their spendthrift ways anytime soon. It was all the more unsettling in Asia, coming ahead of the vital Christmas holiday season, when major export companies rely heavily on Americans to increase their spending on electronics, toys and other goods.
"The figure sparked worries that U.S. consumer spending in the crucial Christmas season will be stagnant. Investors are now bracing for very weak retail sales in the upcoming season," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd. in Tokyo.
In Japan, the benchmark Nikkei 225 index lost 137.41 points, or 1.4 percent, to 10,075.055. Hong Kong's main index retreated 408.01, or 1.8 percent, to 21,761.58.
South Korea's Kospi dived 2.4 percent to 1,609.71, leading the declines in Asia. Australia's market fell 1.4 percent, Taiwan's market lost 1.6 percent and India's Sensex benchmark fell 0.6 percent.
China's Shanghai index recouped its losses to close up 0.3 percent,
In the U.S. overnight, stocks ended a volatile session mostly lower as worries about U.S. consumers overshadowed evidence that home prices were starting to recover.
The Dow rose 0.1 percent to 9,882.17. The broader Standard & Poor's 500 index fell 0.3 percent to 1,063.41, while Nasdaq fell 1.2 percent to 2,116.09.
The mixed signals about the scale of recovery in the U.S. economy weighed on oil prices, with benchmark crude for December delivery lower by 70 cents at $78.85 a barrel in European trade. The contract rose 87 cents to settle at $79.55 on Tuesday.
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Associated Press Writers Jeremiah Marquez in Hong Kong and Shino Yuasa in Tokyo contributed to this report.


Updated : 2020-12-01 05:04 GMT+08:00