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World markets dogged by recovery fears

World markets dogged by recovery fears

Worries over the state of the global economic recovery weighed on stock markets Monday but the euro managed to claw back some lost ground despite the weekend arrest of Dominique Strauss-Kahn, the head of the International Monetary Fund.
Strauss-Kahn's arrest in New York on charges he sexually assaulted a hotel maid had weighed on Europe's single currency as trading got under way in Asia, but investors soon concluded that it was unlikely to affect a meeting of European finance ministers in Brussels later.
Strauss-Kahn had been scheduled to join the meeting to put the finishing touches to a (EURO)78 billion ($111 billion) bailout of Portugal. The ministers will also consider Greece's economic plight and whether to extend it any more help.
The prevailing view in the markets is that in the short-term, Strauss-Kahn's absence from the negotiating table won't make difference but that in the longer-term it may prompt a re-assessment of the role of the IMF and how it deals with Europe's debt difficulties.
"Although the arrest....should not have a significant impact on the negotiations surrounding EU/IMF aid for peripheral eurozone members, it does come at a sensitive political moment for Europe," said Vassili Serebriakov, a currency strategist at Wells Fargo Bank.
By mid afternoon London time, the euro was trading 1 percent higher at $1.42118. Earlier, it had fallen as far as $1.4046, its lowest level since March 29.
Stock markets remained pressured by worries over the global economic recovery though a slightly better than anticipated opening on Wall Street helped rein in the losses in Europe.
In Europe, the FTSE 100 index of leading shares was down 0.3 percent at 5,901 while Germany's DAX fell 0.6 percent to 7,369. The CAC-40 in France was 0.8 percent lower at 3,986.
In the U.S., the Dow Jones industrial average was flat at 12,555 soon after the open while the broader Standard & Poor's 500 index rose 0.2 percent to 1,340.
Doubts about the strength of economic recovery, particular in the U.S., have weighed on markets in the past couple of weeks after they enjoyed their best first quarter since 1998. The Standard and Poor's 500 stock index, a broad market benchmark, is up just 1 percent this quarter after jumping 5.4 percent in the first three months of the year. That weaker performance is in large part because of conflicting data about the health of the U.S. economy.
Earlier in Asia, Japan's Nikkei 225 index dropped 0.9 percent to close at 9,558.30 with banking shares incurring losses following comments last week by Chief Cabinet Secretary Yukio Edano suggesting that Tokyo Electric Power Co. will need help repaying its debts in the wake of March's devastating earthquake and tsunami.
South Korea's Kospi lost 0.8 percent to 2,104.18, and Hong Kong's Hang Seng shed 1.4 percent to 22,960.63.
Mainland Chinese shares lost ground Monday following the latest increase in the central bank's reserve requirement for banks, which was announced Friday. The benchmark Shanghai Composite Index lost 0.8 percent to 2,849.07 and the Shenzhen Composite Index of China's smaller, second exchange lost 0.2 percent to 1,198.72.
Commodities have been badly hit recently by fears over the global recovery and oil prices fell again Monday.
Benchmark crude for June delivery was down 65 cents to $98.96 a barrel in electronic trading on the New York Mercantile Exchange.
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Pamela Sampson in Bangkok contributed to this report.


Updated : 2021-05-15 01:21 GMT+08:00