Traders with Barclay’s Capital work at the New York Stock Exchange, Thursday, Feb. 10, 2011. (AP Photo/Mark Lennihan)
BANGKOK (AP) — World stocks were mostly lower Friday, with South Korea’s benchmark sinking after the country’s central bank signaled more interest rate hikes are in the pipeline, and as anti-government protests in Egypt gathered steam.
Oil prices jumped above $87 a barrel as Egyptian President Hosni Mubarak clung to power amid an escalation in the protests calling for his resignation. The standoff poses a major test for the military as protesters stepped up calls for the army to intervene against Mubarak. The dollar was up against the euro and the yen.
European bourses were down in early trading. Britain’s FTSE 100 was down 0.2 percent to 6,010.22, Germany’s DAX lost 0.4 percent to 7,309.33 and the CAC-40 in Paris was 0.6 percent lower to 4,072.44. Wall Street was set to open lower, with Dow futures down 0.5 percent to 12,145 and SP 500 futures 0.5 percent lower to 1,312.90.
South Korea’s Kospi tumbled 1.6 percent to 1,977.19 after the country’s central bank left its key interest rate unchanged while also highlighting the problem of rising inflation, suggesting it will raise rates in coming months. The Bank of Korea unexpectedly raised the rate in January for the second time in three months.
Central banks in Asia have been raising borrowing costs in a bid to stem inflation amid robust economic growth. China’s central bank raised interest rates Tuesday for the second time since late December to rein in rising prices. India, Indonesia and Thailand have also hiked rates recently.
Australia’s SP/ASX 200 let go of the previous day’s gains, dropping 0.7 percent to 4,880.90. Indexes in Singapore, Taiwan, Malaysia and Indonesia were also lower. Japan’s markets were closed for a public holiday.
Meanwhile, Hong Kong’s Hang Seng rose 0.5 percent to 22,828.92 but failed to close above 23,000 for the second day in a row.
Tom Kaan of Louis Capital Markets said the index’s recent fall below 23,000 was led by faltering shares in the company that runs the territory’s stock exchange following a flurry of merger discussions between exchanges that didn’t include Hong Kong’s.
Later, the company — Hong Kong Exchanges and Clearing Ltd. — released a statement saying it is not aware of any reason for the unusual changes in price and trading volume of its shares, which rose 0.7 percent Friday after falling 6 percent for the week.
The company said it is aware of recent announcements by other major stock exchanges contemplating mergers and it is “monitoring these developments,” but it is not involved in any such talks.
Mainland Chinese shares ended the week on an upbeat note in active trading as investors settled down after the interest rate hike announced Tuesday. The benchmark Shanghai Composite Index gained 0.3 percent to 2,827.33, while the Shenzhen Composite Index of China’s smaller, second exchange rose 1.1 percent to 1,234.18.
“The latest interest rate hike was in line with expectations, so its influence is rather limited,” said Peng Yunliang, an analyst at Shanghai Securities, in Shanghai.
Market sentiment was otherwise glum as anti-government protests in Egypt picked up steam and Wall Street sagged after a bright week.
“With Egypt looking like it’s blowing up again, investor confidence is really not there,” said Kaan. “I am worried about the U.S. market after an eight-day winning streak, you may see a correction coming in and that could weigh on Asian markets next week.”
U.S. stocks finished flat Thursday, dragged down by Cisco Systems Inc. and Akamai Technologies Inc. Both issued weak earnings forecasts, raising concerns about business and technology spending. Cisco, the world’s largest networking equipment maker, had a 14 percent drop — the largest fall of the 30 stocks that make up the Dow.
The Dow Jones industrial average lost 10 points to 12,229. The SP 500 rose a point to 1,321. The Nasdaq composite rose 1.4 point to 2,790.
Stocks traded lower much of the day despite the Labor Department saying that 383,000 people applied for unemployment benefits for the first time last week, the lowest level in nearly three years. Economists say applications would need to fall to 375,000 or below on a consistent basis before the unemployment rate will decline.
Benchmark crude for March delivery was up 75 cents at $87.48 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents to settle at $86.73 per barrel on Thursday.
A surge in Portugal’s borrowing costs, meanwhile, again inflamed concerns about Europe’s debt crisis, leading to a slip in the euro against the dollar. The European currency slid to $1.3540, after falling to $1.3593 late Thursday. The dollar was also stronger against the Japanese yen, at 83.49 from 83.32 late Thursday.