World stocks drift as US rate rise prospect, weak China outlook weigh on sentiment

Markets Associated Press

World stock markets drifted Wednesday as investor sentiment was kept in check by the prospect of higher U.S. interest rates following improved economic data as well as the lingering fears about China's weakening growth.

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KEEPING SCORE: European shares were mixed in early trading. France's CAC 40 slipped 0.1 percent to 5,081.30 and Germany's DAX edged up 0.1 percent to 12,017.92. Britain's FTSE 100 crept up 0.1 percent to 7,028.65. U.S. stocks looked set for a lackluster start, with S&P 500 futures nearly unchanged.

INVESTOR INDECISION: Markets were mostly in a holding pattern as investors turned cautious following recent economic data on the world's two biggest economies. U.S. government data showed that in February consumer prices rose in for the first time in four months while new home sales climbed to their fastest pace in seven years. That was a good sign for the world's No. 1 economy that nonetheless also raises concerns the Fed could soon raise interest rates. The reports came after HSBC's preliminary purchasing managers' index showed Chinese manufacturing activity slumped to the lowest in 11-months, signaling further weakness in the second biggest economy.

MARKET VIEW: "It remains to be seen whether we are going through a period of equilibrium, where bulls and bears even each other out, or simply a period where traders are happy to ride out the end of a good quarter by staying on the sidelines," Nicholas Teo of CMC Markets in Singapore wrote in a commentary.

DATA FLOW: It was a light day for economic releases in Asia but investors will be watching for a few key reports from Europe and the U.S. In Germany the Ifo institute releases its monthly business confidence index, a key indicator for Europe's biggest economy. Later, the U.S. commerce department releases durable goods orders for February.

ASIA'S DAY: Japan's benchmark Nikkei 225 index reversed earlier losses to close 0.2 percent at 19,746.20 and South Korea's Kospi rose less than 0.1 percent to 2,042.81. Hong Kong's Hang Seng climbed 0.5 percent to 24,528.23 while the Shanghai Composite Index in mainland China lost 0.8 percent to 3,660.73. Australia's S&P/ASX 200 finished up less than 0.1 percent at 5,973.30, just off its highest level in more than seven years. Southeast Asian indexes were mixed.

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ENERGY: Benchmark U.S. crude futures lost 39 cents to $47.11 in electronic trading on the New York Mercantile Exchange. The contract rose 6 cents to close at $47.51 a barrel. Brent crude, a benchmark for international oils, added 2 cents to $55.10 in London.

CURRENCIES: The dollar slipped to 119.61 yen from 119.75 in the previous session. The euro strengthened to $1.0963 from $1.0914.