World stocks unsteady ahead of Bernanke speech

August 26, 2011 3:56:43 AM PDT
World stock markets were unsteady on Friday as jittery investors waited to see whether Federal Reserve Chairman Ben Bernanke would promise new steps to help the U.S. economy ward off another recession.

Bernanke is due to deliver a highly anticipated speech at a conference later Friday in Jackson Hole, Wyoming. Although expectations that he might offer more stimulus have receded this week, any sign that he is considering such a move would boost markets.

The Fed has already pledged low interest rates through to 2013. Some central bank watchers say the Fed has reached the limits of what a central bank can do to aid an economy that is beleaguered by problems that monetary policy can't fix -- high unemployment and massive government debt.

"The market is very volatile on low trading volume. Any news can be a big thing," said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

European shares were lower in early trading. Britain's FTSE 100 dropped 0.4 percent to 5,113.22 while Germany's DAX shed 1.2 percent to 5,519.74 and France's CAC-40 slipped 0.6 percent to 3,101.63.

Wall Street was nevertheless set to open slightly higher, with Dow futures up 0.2 percent at 11,148 and S&P 500 futures 0.2 percent higher at 1,159.90.

In Asia, Japan's Nikkei 225 swung between gains and losses throughout the day before closing with a 0.3 percent gain at 8,797.78. South Korea's Kospi rose 0.8 percent after a volatile morning to 1,778.95.

Hong Kong's Hang Seng gave up early gains and fell 0.9 percent to 19,582.88. Benchmarks in Australia, Singapore and the Philippines were also lower while stocks in mainland China were mixed.

Worries that the U.S. could be headed for another recession have in recent weeks caused huge volatility in equities, bonds and foreign exchange.

On Thursday, Germany's main index suffered a flash slide -- about 4 percent in 15 minutes -- that analysts and traders were at a loss to explain but which dented investor confidence in other global markets.

That sentiment will be tested by the U.S. Commerce Department's release of economic figures -- it is expected to lower its estimate of April-June economic growth to 1.1 percent from 1.3 percent.

Bank stocks, however, got a boost after billionaire investor Warren Buffett said he would invest $5 billion in troubled Bank of America, the largest U.S. bank.

Mainland Chinese shares were mixed with the benchmark Shanghai Composite Index edging 0.1 percent lower to 2,612.19, after dipping almost 1 percent earlier in the day. The smaller Shenzhen Composite Index gained 0.3 percent to 1,169.95.

In currency trading, the euro rose to $1.4433 from $1.4368 late in New York on Thursday. The dollar slipped to 77.01 yen from 77.55 yen.

Benchmark oil for October delivery was down 38 cents to $84.92 in electronic trading on the New York Mercantile Exchange. Crude rose 14 cents to finish at $85.30 on Thursday. In London, Brent crude for October delivery was down 44 cents to $110.18 on the ICE Futures exchange.

Traders are watching the violence in Libya for any signs that the country might stabilize and start working on restoring some of the 1.6 million barrels of oil it used to produce before its civil war erupted.

Together with fears of a global economic slowdown, the prospect has weighed on oil prices.

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