World stocks tepid as central bank action weighed

BANGKOK (AP) ? World stock markets were mostly muted Thursday as traders tried to assess whether the central banks of the world's two biggest economies, the U.S. and China, would take action to spur growth.

Premier Wen Jiabao, during a visit to eastern China earlier this week, was quoted by the official Xinhua News Agency as saying the country has the "conditions and capabilities" to meet its 7.5 percent economic growth target this year.

That raised expectations that the People's Bank of China would either lower the ratio of funds that banks must hold as reserves, known as the reserve requirement ratio, or lower interest rates. The bank so far this year has lowered both twice in an effort to boost lending and spur growth.

"I think it is unlikely they will cut interest rates because they still want to see prices coming down in the property sector," said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong. "But like a lot of central banks, they are saying they are prepared to do sometime if it becomes necessary," he said.

The statement helped boost trading sentiment in Asia, but failed to ignite much excitement in Europe. In early trading, Britain's FTSE 100 was nearly unchanged at 5,833.95. Germany's DAX rose less than 0.1 percent to 6,950.94 while France's CAC-40 shed 0.1 percent to 3,446.43. Wall Street appeared headed for slight gains, with Dow Jones industrial futures rising 0.1 percent to 13,149 and S&P 500 futures slightly up at 1,404.50.

Earlier in the day, stocks in Japan posted solid gains. The Nikkei 225 index rose 1.9 percent to close at 9,092.76 ? its highest finish in six weeks.

Hong Kong's Hang Seng shifted gears and closed lower after shedding morning gains. The index fell 0.5 percent to close at 19,962.95. Australia's S&P/ASX 200 added 1.1 percent to 4,330.20. South Korea's Kospi was slightly up at 1,957.91.

Benchmarks in Singapore and Taiwan were also up. But mainland Chinese shares fell. The Shanghai Composite Index lost 0.3 percent to 2,112.20. The smaller Shenzhen Composite Index lost 0.8 percent to 879.94.

Many investors wonder whether the Federal Reserve will take action to prop up a fragile recovery. The Fed signaled at a meeting in late July that it is ready to act if growth and hiring stays weak. The Fed's policy committee next meets in September.

Investors also think the European Central Bank will announce new policy measures in the coming weeks. The ECB is expected to restart its bond-buying program in order to hold down borrowing rates of Italy and Spain.

"The lack of negative surprises related to the Euro crisis so far this week has allowed for a mild mood of risk appetite, as hopes for policy action in a few weeks remains high," analysts at Credit Agricole CIB in Hong Kong wrote in a market commentary.

Among individual stocks, Lenovo Group Ltd. jumped 6.3 percent in Hong Kong after the Beijing-based personal computer maker ? the world's second-largest ? reported its latest quarterly profit rose 30 percent.

Hong Kong-listed China Yurun Food Group, a major meat producer, fell 10.2 percent on worse-than-expected results. Japanese electronics maker Panasonic Corp. rose 5.5 percent and Hitachi Ltd. added 5.6 percent.

Benchmark oil for September delivery was down 7 cents to $94.26 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 90 cents to finish at $94.33 per barrel Wednesday in New York, its highest level since mid-May.

In currencies, the euro fell to $1.2277 from $1.2290 in New York late Wednesday. The dollar rose to 79.30 from 78.88 yen.

Source: http://news.yahoo.com/world-stocks-tepid-central-bank-action-weighed-092043836--finance.html

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