PR; European stocks pare losses as US opens higher
European stocks recovered some of their earlier losses Wednesday, tracking a rise in U.S. markets on the announcement of a buyout deal in the troubled American homebuilding industry.
Asian markets dropped overnight, however, after a dismal start to the U.S. earnings season dampened hopes that the worst of the economic slump is over.
In afternoon European trading, Britain's FTSE 100 was down 0.1 percent at 3,924.92, while Germany's DAX rose 0.8 percent to 4,358.29, and France's CAC 40 added 0.7 percent to 2,921.46.
In morning trading in New York, the Dow Jones industrial average climbed 0.6 percent to 7,834.64, and the Standard & Poor's 500 index added 0.8 percent to 821.97.
Stocks rose after U.S. homebuilder Pulte Homes Inc. said it had agreed to buy rival Centex Corp. for $1.3 billion in a deal that will create the nation's largest homebuilding company. It provided a glimmer of hope that the stricken American homebuilding industry may be getting back on its feet.
The news also helped offset disappointment over the failure of a $7 billion takeover deal between technology giants IBM Corp. and Sun Microsystems, which unraveled earlier this week.
Market sentiment remained fragile, however. Earlier in Asia, investors unloaded shares across most industries _ from financials to energy firms and airlines _ after more overnight weakness on Wall Street that stirred talk of an end to the huge, monthlong advance in global equities since March.
After the close of the U.S. market Tuesday, aluminum maker Alcoa Inc. reported a wider-than-expected loss as prices plunged amid softening demand. It underscored the deterioration of aluminum-intensive industries such as autos and construction amid the recession, and was a bleak opening to the earnings period. It also added to anxiety that the recession's toll on major companies could be worse than many already fear.
«I think Alcoa's numbers coming in worse than expected gives us a view of what we can expect,» said James Hughes, market analyst at CMC Markets in London. «I think the view is we're going to lose a lot of the rally we have seen over the last four weeks or so in the next three weeks or so.
Oil companies Royal Dutch Shell, Total and BP slipped as the price of benchmark crude fell 80 cents to $48.35 in European trading. The contract for May delivery fell $1.90 on Tuesday to settle at $49.15.
In Paris, shares in Pernod Ricard SA lost 6 percent after the French drinks company unveiled a debt reduction plan that includes raising ¤1 billion ($1.3 billion) in fresh capital and selling off its Wild Turkey bourbon brand to Italy's Gruppo Campari.
Shares in Daimler rose 8 percent after the German automaker said it will see more cost-cutting and a reduced dividend this year, as it reiterated it expects a first-quarter loss because of the economic downturn.
In Japan, electronics maker Sharp Corp. warned of a bigger loss than first estimated for the fiscal year ended March, its first annual red ink in almost 60 years. Japan's Nikkei 225 stock average fell 2.7 percent to 8,595.01, with exporter shares hurt after the dollar sank below 100 yen. Hong Kong's Hang Seng shed 3 percent to 14,474.86.
Elsewhere, South Korea's Kospi lost 2.9 percent to 1,262.07, while Shanghai's index dived 3.8 percent. Stock measures in Australia, Taiwan and Singapore all lost about 2 percent or more.
Falling overseas demand and prices for Asian electronics, cars and other goods have been bruising for companies and consumers alike in the region.
Stimulus efforts by a number of countries, notably China, have helped offset some of the pain and lifted optimism that regional growth can recover soon, though the full impact of the pump priming is still unclear.
China's measures are starting to filter through to its own economy, but they may offer only modest help to other Asian nations counting on stronger Chinese demand, HSBC economists said in a report Wednesday.
Trouble at regional exporters was underscored by Sharp's announcement Wednesday that it expects to post a net loss of 130 billion yen ($1.3 billion), worse than the previous forecast for a 100 billion yen loss. The company's shares dived 6.1 percent.
AP business writer Jeremiah Marquez in Hong Kong contributed to this report.
