Global stocks meander as US budget debate looms

Written By Unknown on Kamis, 26 September 2013 | 18.38

BANGKOK — Worries about the U.S. economy and a looming budget battle in Washington kept global stock markets in check Thursday.

Data released Wednesday showed orders for long-lasting durable goods increased by only 0.1 percent in August after a sharp drop the month before, raising concerns that third quarter U.S. economic growth may not be as strong as anticipated.

Meanwhile, two financial deadlines for the U.S. government loom. Congress needs to pass a funding bill to keep the federal government operating after Oct. 1, when its new fiscal year starts. And the nation's borrowing limit needs to be raised before Oct. 17.

"The prospect of a U.S. Federal government shutdown is likely to undermine equity prices further in the coming days," said analysts at Capital Economics in an email commentary.

The White House and Republican lawmakers, who disagree on spending cuts and other key budget issues, have just days to reach a compromise. In 2011, a similar situation roiled markets at a time when Europe's debt crisis was flaring, and prompted Standard & Poor's to strip the U.S. of its triple A credit rating.

European stocks fell in early trading. Britain's FTSE 100 was down less than 0.1 percent to 6,547.49. Germany's DAX shed 0.2 percent to 8,646.49. France's CAC-40 lost 0.3 percent to 4,181.72.

Wall Street looked set to recover ground lost after five straight losing sessions. Dow Jones industrial future rose 0.1 percent to 15,231 and S&P 500 futures gained 0.2 percent to 1,688.90.

Japan's Nikkei 225 index overcame initial losses to advance 1.2 percent, closing at 14,799.12. South Korea's Kospi gained 0.5 percent to 2,007.32. Australia's S&P/ASX 200 index rose 0.4 percent to 5,294.50. Benchmarks in Indonesia and India rose, while those in Singapore, Taiwan, Thailand and the Philippines fell.

Hong Kong's Hang Seng shed 0.4 percent to 23,125.03 and the Shanghai Composite Index dropped 1.9 percent to 2,155.81. Chinese banking shares fell after reports showed a sharp drop in total yuan deposits.

"The banks in China lost about 200 billion in deposits. The money probably went into shadow banking, which means they created a liquidity problem for banks," said Francis Lun, chief economist at GE Oriental Financial Group in Hong Kong.

Hong Kong-listed China Construction Bank fell 1.3 percent while Industrial and Commercial Bank of China, the world's biggest bank by market value, lost 0.5 percent.

Benchmark oil for November delivery was up 15 cents to $102.78 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 47 cents to close at $102.66 a barrel on the Nymex on Wednesday.

In currencies, the euro fell to $1.3505 from $1.3517 late Wednesday. The dollar rose to 98.92 yen from 98.48 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson


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