European stocks, euro rise ahead of Irish budget

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SEOUL, South Korea (AP) — Stock markets in Asia were mixed Tuesday as a stronger yen helped pushed down big name Japanese exporters and worries about a possible interest rate hike in China damped sentiment.

Japan’s Nikkei 225 stock average fell 0.2 percent to 10,147.36.

Investors sold shares of Japanese exporters as the yen climbed against the dollar. A stronger yen reduces the value of exporters’ overseas profits when repatriated. Sony Corp. was down 1.2 percent, while Honda Motor Co. fell 1.8 percent.

China’s benchmark Shanghai Composite index shed 0.5 percent to 2,842.73 amid speculation by Chinese media that Beijing may hike interest rates soon.

China and Japan — Asia’s two biggest economies — are facing opposite challenges.

Japan is trying to bolster growth through low interest rates in the face of persistent deflation, or falling prices, and a stubborn headwind in the form of a strong yen.

China, a key growth driver for the world, is grappling with how to douse rising prices and cool its still red-hot economy. November inflation, which analysts say might show a further increase, is due out Monday.

The inflation rate spiked to 4.4 percent in October — well above the official 3 percent target — driven by a 10.1 percent jump in food costs.

“There could be some nervousness about China’s inflation numbers and new possible tightening measures, including rate hikes,” said Mark Tan, who helps manage the equivalent of about $11 billion in bonds and equities at UOB Asset Management in Singapore.

Benchmarks in Singapore, New Zealand, the Philippines and India also retreated.

Hong Kong’s Hang Seng Index rebounded from early losses to rise 0.6 percent to 23,369.19. South Korea’s Kospi rose 0.4 percent to 1,962.32, and Australia’s SP/ASX 200 added 0.9 percent to 4,730.30, thanks to buying into natural resource-related issues.

Australian mining giant BHP Billiton Ltd. rose 1.2 percent, while rival Rio Tinto Ltd. added 1.6 percent.

In New York on Monday, the Dow Jones industrial average fell 19.90, or 0.2 percent, to close at 11,362.19, breaking a three-day winning streak.

Stocks spent most of Monday in a funk brought on by cautious comments about the economy from Federal Reserve Chairman Ben Bernanke. Hopes for a compromise on extending Bush-era tax cuts and unemployment benefits erased some of the losses.

The broader Standard Poor’s 500 index lost 1.59, or 0.1 percent, to 1,223.12. The Nasdaq composite index rose 3.46, or 0.1 percent, at 2,594.92.

Later Monday, President Barack Obama announced an agreement with opposition Republicans to extend expiring tax cuts for all Americans and to renew benefits for the long-term unemployed.

In currencies, the dollar slipped to 82.45 yen from 82.67 yen late Monday. The euro stood at $1.3341 from $1.3304.

Benchmark oil for January delivery shed 18 cents to $89.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract hit $89.76 on Monday before pulling back to settle at $89.38, up 19 cents.

Associated Press writers Tomoko Hosaka in Tokyo, Joe McDonald in Beijing and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

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