Alexa
  • Directory of Taiwan

Europe markets retreat while Asia climbs

Europe markets retreat while Asia climbs

European stock markets lost ground Wednesday, dragged down by Greece's sovereign debt woes even as U.S. and Asian markets were mostly higher as robust U.S. earnings offered new evidence of recovery in the world's largest economy.
London's FTSE 100 and France's CAC 40 were both off by 1.04 percent, to 5723.66 and 3984.95, respectively. Germany's DAX was off 0.51 percent to 6232.31. Oil fell by $0.45 to drop to $83.4 per barrel, retreating from earlier gains that pushed it past $84 per barrel as flights to and from Europe resumed after about six days of cancellations tied to the Icelandic volcano.
Brokers attributed the Europe decline to a range of factors, including Greece's continuing sovereign debt challenges and news that Anglo-Australian mining company BHP Billiton Ltd. is cooperating with U.S. authorities in a corruption investigation involving government officials.
"The underlying factor is some nerves over the Greek situation being resurrected," said Keith Bowman of Hargreaves Lansdown Stockbrokers in London. "The bond markets are showing some nerves, with yield spreads widening."
Greek officials were meeting with the International Monetary Fund, the European Commission and the European Central Bank starting Wednesday to discuss details of the rescue package for its (EURO)300 billion ($406 billion) in debts.
The country needs to borrow about (EURO)54 billion this year alone _ money it hopes to secure from the international market despite pledges of (EURO)30 billion from eurozone countries this year.
The costs of borrowing for the country, however, have spiked. On Wednesday the spread between Greek 10-year bonds and German ones _ considered a benchmark of stability _ shot to new record highs of 5.18 percentage points, a level that translates into prohibitively high interest rates of about 8 percent. That's more than twice Germany's rates.
The drop in European markets _ a day after a strong rally on the back of upbeat earnings reports in the U.S. _ including by investment bank Goldman Sachs, were a stark contrast to the gains in Asia. Some of that region's major benchmarks were up 1.5 percent or more, pulled ahead by optimism about the technology sector following Apple Inc.'s announcement that net income shot up 90 percent in the first quarter, shattering Wall Street's expectations.
In the U.S. the Dow Jones industrial average rose 28.65, or 0.3 percent, to 11,145.71 by midmorning. The broader Standard & Poor's 500 index rose 3.15, or 0.3 percent, to 1,210.32. The Nasdaq composite index rose 6.72, or 0.3 percent, to 2,507.03.
The Dow's gains were on the back of another round of strong earnings, including from Intel Corp. IBM Corp. and Morgan Stanley.
Earlier in Asia, Japan's Nikkei 225 stock average climbed 1.7 percent to 11,090.05 while South Korea's Kospi rose 1.7 percent to 1,747.58 and Hong Kong's Hang Seng retreated 0.5 percent to 21,510.93. Australia's benchmark gained 0.6 percent and China's Shanghai stock gauge added 1.8 percent.
The tech sector's strength failed to sustain gains early Wednesday in Europe.
"Tech's not managing to hold the levy, so to speak," said Marc Ostwald, strategist at Monument Securities in London. "We are obviously gong to be looking very closely to how the U.S. reacts to another hefty barrage of earnings.
In currencies, the dollar stood at 93.19 yen from 92-yen levels in Asian trade the previous day. The euro was at $1.3386, down from $1.3438 late Tuesday in New York.