AP: US economic data disappointment weighs on markets
LONDON — An unexpected decline in U.S. durable goods orders during June weighed on stock markets Wednesday as it reinforced concerns that the recovery in the world's biggest economy is rapidly running out of steam.
In Europe, the FTSE 100 index of leading British shares was down 30.23 points, or 0.6 percent at 5,335.44 while Germany's DAX fell 42.22 points, or 0.7 percent to 6,165.09. The CAC-40 in France was 0.1 percent lower at 3,662.26.
On Wall Street, the Dow Jones industrial average was down 22.93 points, or 0.2 percent, at 10,514.76 soon after the open while the broader Standard & Poor's 500 index was down 2.65 points, or 0.2 percent, at 1,111.19.
Wall Street had been expected to open modestly higher before the Commerce Department reported that U.S. durable goods orders fell by 1 percent in June, confounding market expectations for a near-equivalent increase.
June's decline was the largest in ten months and the second in a row, adding weight to the argument that the U.S. economic recovery slowed dramatically during the second quarter.
The figures could well prompt analysts to further revise down their forecasts for second-quarter growth. The first estimate of second-quarter U.S. economic growth is due Friday. Before the durable goods data, the figures were expected to show that the U.S. economy grew by an annualized rate of around 2.5 percent.
"Over the past weeks the data coming in have told a consistent story of a slowing down of the U.S. recovery and creeping in pessimism and caution," said Jacob Gloser, an economist at the Centre for Economic and Business Research.
In the currency markets, the euro was flat at $1.30 as it continued to struggle to sustain a break above that mark.
Some analysts think the dollar could rebound as concerns about the pace of the U.S. recovery mount — _ the dollar is widely considered one of the safest assets to hold at times of uncertainty and therefore benefits when the appetite for risk declines.
That could be reinforced by the notion that a slowdown in the U.S. will do nothing for Europe's economy, which is trying to grow at a time when a number of its governments are reeling from the debt crisis and introducing austerity measures.
The euro has been buoyed in recent days by a raft of stronger than anticipated European economic data, notably out of Germany, relief that last Friday's bank stress tests did not highlight any systemic problems, and buoyant bank earnings from the likes of Deutsche Bank AG and UBS AG.
Most analysts expect the U.S. Federal Reserve's monthly economic assessment later, known as the Beige Book, to echo the findings from the recent dataflow, which shows a slowdown across most sectors despite a largely positive set of quarterly corporate earnings. A release Tuesday showed U.S. consumer confidence on the wane — that's a concern because U.S. retail spending accounts for around 70 percent of the economy.
Earlier, Japan led the advance in Asia, with the Nikkei 225 stock average closing 2.7 percent higher at 9,753.27 after laser printer and digital camera marker Canon reported a surge in quarterly earnings. Investors were also relieved that the yen's recent export-sapping appreciation against the dollar was reversing somewhat — by mid afternoon London time, the dollar was down 0.4 percent at 87.57 yen, still quite a way higher than where it started the week.
China's main Shanghai index rose strongly after China's central bank said it believes the mainland's economy is unlikely to suffer a "double dip" and the International Monetary Fund said growth would likely be robust. The index closed up 2.3 percent at 2,633.66, its highest finish since May 14.
Hong Kong's Hang Seng gained 0.6 percent to 21,091.18 and South Korea's Kospi advanced 0.3 percent to 1,773.47. Australia's benchmark added 0.7 percent to 4,529.90. Markets in Singapore, Taiwan, Indonesia and New Zealand also rose.
Oil prices fell below $77 a barrel as investors became cautious about the U.S. recovery following the durable goods data. Benchmark crude for September delivery was down 61 cents at $76.89 a barrel in electronic trading on the New York Mercantile Exchange.
