Thursday, July 7, 2011

ASIA-Shares likely to be tentative as global markets sag

WELLINGTON: Asian stocks are likely to pause on Thursday, as policy tightening in China and Portugal's credit downgrade worked to erase some of the positive mood which had lifted markets over the past week.

China's central bank increased interest rates for the third time this year on Wednesday, making clear that taming inflation is a top priority as its economy slows gently.

The main Wall Street indices posted modest gains of between 0.1 percent and 0.5 percent, with the transport sector, a good barometer of economic activity the standout performer.

The Dow Jones Transportation Average rose 1.2 percent to a closing record high, led by Con-Way Inc who cited economic improvement. For details, see

Asian stocks listed on Wall Street were virtually unchanged while global stocks as measured by the MSCI world equity index fell 0.31 percent and the Thomson Reuters global stock index was 0.13 percent lower.

British stocks fell 0.4 percent and European ''shares fell 0.3 percent, as debt fears flared in the wake of Portugal's downgrade to junk status by Moody's and the China tightening weighed on sentiment.

Those concerns also dragged the euro lower, while safe havens such as the Japanese yen gained.

Japanese markets, which rose to a post-quake high on Wednesday for the longest rising streak in two years, are likely to be more tentative after the Chinese rate rise and firmer yen.

Nikkei futures traded in Chicago are up 0.5 percent, but barely changed from the last closing level in Osaka.

Australian stocks are looking to a negative start, with share price index futures down 8 points to 4,583, a 22 point discount to the close of the underlying S&P/ASX 200 index. ' Reuters


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