US housing data disappointment weighs on world markets

US housing data weigh on world markets

LONDON — European stock markets closed lower Monday after disappointing U.S. housing data stoked another bout of jitters about the world’s largest economy.

Britain’s FTSE 100 index of leading British shares ended 10.57 points, or 0.2 percent, lower while Germany’s DAX fell 31.16 points, or 0.5 percent, to 6,009.11. The CAC-40 in France closed down 13.83 points, or 0.4 percent, at 3,486.33.

European stocks had been trading higher for most of the session until figures from the National Association of Home Builders showed confidence in the U.S. housing market down at a year low during July.

U.S. stocks pared their earlier gains in the wake of the data — the Dow Jones industrial average was up only 13.04 points, or 0.1 percent, at 10,110.99 around midday New York time while the broader Standard & Poor’s 500 index was barely 0.1 percent higher at 1,065.39.

The U.S. housing news follow a raft of disappointing economic signals out of the U.S. Last week, markets were hit hard by a plunge in consumer confidence as well as downbeat manufacturing surveys.

The main worry in the markets at the moment — replacing the government debt crisis in Europe — is that a sharp slowdown is taking place in the U.S., with consequences all around the world.

Stocks had been buoyed earlier by strong earnings from the likes of Royal Philips Electronics NV and appliance maker Electrolux in Sweden, toy maker Hasbro and oil services company Halliburton also surprised markets with strong reports.

That partially eased worries about last week’s U.S. indicators — poor results from Citigroup Inc. and Bank of America Corp. and a slump in consumer confidence to its lowest point in nearly a year.

The increasingly troubled outlook for the U.S. has begun to overshadow fears from Europe’s government debt woes, as markets seem to feel the debt crisis has eased ahead of the release of bank stress test results this week.

In fact, the recovery from Friday’s sharp losses came despite a one-notch downgrade by Moody’s of Ireland’s public debt. The ratings agency cited a weak growth outlook, high debt levels and large banking liabilities. In another reminder of Europe’s debt crisis, officials from the International Monetary Fund and the European Union said they had suspended talks of another loan for Hungary.

Yet investors mostly looked past the reports, bidding the euro up to $1.2961 from $1.2947 in New York late Friday — a sign that fears about the debt crisis have largely calmed.

The publication on Friday of EU-wide stress tests of banks, a simulation to see how the region’s 91 biggest lenders would fare if the economy worsened sharply, will be European traders’ main focus this week.

“Although several European governments have suggested that the banks in their countries will pass the tests there is still a considerable event risk surrounding the announcement,” said Mitul Kotecha, analyst at Credit Agricole.

He said much will depend on how rigorous the tests are perceived to be.

In Asia, most indexes closed lower to make up for last week’s losses on Wall Street. Hong Kong’s Hang Seng index shed 159.21 points, or 0.8 percent, to close at 20,090.95. Australia’s S&P/ASX 200 lost 1.5 percent while Seoul’s Kospi closed 0.4 percent down.

Markets in Japan were closed for a national holiday.

The Shanghai benchmark, however, rose — gaining 2.1 percent to 2,475.42 — on speculation that the Chinese government was committed to supporting the Agricultural Bank of China’s initial public offering to prevent it from dropping below its offer price.

Benchmark crude for August delivery was up 68 cents at $76.69 a barrel in electronic trading on the New York Mercantile Exchange.

Associated Press writer Pamela Sampson in Bangkok contributed to this report.