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World stocks down ahead of US growth figures

World stocks down ahead of US growth figures

World stock markets mostly slipped Friday as investors braced for growth figures for the U.S. economy, the world's largest, and worried about debt problems in large economies like Japan.
Markets were still rattled from the previous day's credit rating downgrade of Japan by Standard & Poor's. Rival agency Moody's Investors Service later said that the U.S. rating outlook remains under pressure, increasing the likelihood that it might fall to 'negative' from 'stable' over the next two years due to high levels of debt.
Against that backdrop, the U.S. economic growth figures for the fourth quarter will be crucial to markets.
Economists on average forecast that the economy expanded at an annualized rate of 3.5 percent in the October-December quarter. If they are right, it would show the economy has consistently gained speed since hitting a rough patch in the spring, when Europe's debt crisis hurt sales of U.S. exports and crimped business activity.
How well consumer spending picks up will be key, as it accounts for three quarters of the U.S. economy and a fifth of global growth.
"The financial markets have been taking a rosier view of U.S. economic performance in recent weeks, largely on indications of stronger than expected consumer purchases during the holiday season," said Stephen Lewis at Monument Securities in London.
However, he noted growth is still unlikely to be strong enough to fill spare capacity, meaning the economy still has plenty of idle resources such as factories and workers. Unemployment, which has remained stubbornly high despite the recovery, is a top concern for the Federal Reserve, which has shown no indication of wanting to tighten its monetary policy anytime soon.
In Europe, eyes were on Spain, where the government reached a deal with unions on raising the retirement age to 67 from 65. Along with measures to bolster the troubled savings banks, the pension reform plan is a key component in the country's fight to ease tensions over the debt crisis.
Madrid's exchange was among the top risers in Europe _ gaining 0.4 percent _ as the pensions deal offset the news that Spanish unemployment rose back above the 20 percent level in the fourth quarter.
Elsewhere, Britain's FTSE 100 was 0.7 percent lower at 5,920.05 while Germany's DAX gained 0.1 percent to 7,163.20. France's CAC-40 was down 0.1 percent to 4,056.93.
Europe's debt crisis has eased over the past weeks on signs that governments are committed to a broader, bolder strategy to regain market confidence. Public borrowing rates have fallen and the 17-nation euro has rallied sharply. On Friday, the common currency was down slightly from two-month highs to trade at $1.3695 from $1.3729 in New York late Thursday.
Wall Street was headed for a lower opening, with Dow futures down 0.1 percent to 11,938 and S&P 500 futures losing 0.1 percent to 1,294.
In Asia, Japan's benchmark Nikkei 225 stock average dropped 1.1 percent to close at 10,360.34 as traders reacted to the news _ revealed after the close the previous day_ that Standard & Poor's has lowered Japan's long-term sovereign debt rating one notch to AA- due to its ballooning public debt.
Investors dumped shares in banks, which own large amounts of government bonds. Mitsubishi UFJ Financial Group, Japan's biggest bank, fell 2.7 percent. Mizuho Financial Group, the No. 2 banking group, declined 1.2 percent and Sumitomo Mitsui Financial Group retreated 1.6 percent.
Analysts said signs of weakness in some of the world's leading economies were causing investors to think hard about stocks and whether now was a time to jump in, stay put, or head for the exits.
The rating given Japan on Thursday _ its first downgrade in almost nine years _ is the same rating given to China, Saudi Arabia and Kuwait. The news sent the dollar as high as 83.18 yen late Thursday from 82.20 yen. On Friday it was trading at 82.63.
The downgrade is a stern reminder to Japan that it faces consequences for letting its debt swell to twice the size of gross domestic product. The government estimated Japan's public debt would swell to 997.7 trillion yen ($12 trillion) by March 2012, up from 943 trillion yen this year.
Elsewhere, Australia's S&P/ASX 200 closed down 0.7 percent at 4,774.90 as the first estimates of the economic cost of east coast flooding _ possibly the most expensive natural disaster in Australia's history _ were released.
South Korea's Kospi declined 0.3 percent to 2,107.87 and Hong Kong's Hang Seng fell 0.7 percent to 23,617.02. Shares in Indonesia and Thailand were all lower.
China's Shanghai Composite index gained 0.1 percent to 2,752.75. Benchmarks in Taiwan and New Zealand were also higher.
Benchmark crude for March delivery was down 1 cent at $85.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.69 to settle at $85.64 a barrel on Thursday.
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Pamela Sampson in Bangkok contributed to this report.


Updated : 2021-06-23 17:44 GMT+08:00