Recovery concerns stalk markets; apparent Bank of Japan intervention fails to weaken yen

Global recovery concerns stalk markets

LONDON — Concerns about the global economic recovery weighed on market sentiment Friday while the impact of the Bank of Japan’s latest apparent intervention to weaken the yen proved short-lived.

In Europe, the FTSE 100 index of leading British shares was down 8.88 points, or 0.2 percent, to 5,538.20 while Germany’s DAX fell 7.51 points, or 0.1 percent, to 6,177.20. The CAC-40 in France was 9.03 points, or 0.2 percent, to 3,701.58.

Wall Street was poised to recover some of Thursday’s losses when a surprisingly big increase in weekly jobless claims figures spooked investors — Dow futures were up 38 points, or 0.4 percent, at 10,644 while the broader Standard & Poor’s 500 futures rose 4.2 points, or 0.4 percent, to 1,124.60.

“Once again it’s all about the data so as numbers from both the U.S. and Europe yesterday underlined the fact that a double dip was still a real possibility,” said Ben Potter, market strategist at IG Index.

The impact of an unexpected improvement in German business confidence in September, as measured by the Ifo Institute, was diluted by the fact that most businesses in Europe’s biggest economy expect tougher conditions in the months ahead as the global economic recovery slows down.

“The Ifo business climate tends to suggest a weakening of economic growth,” said Ralph Solveen, an economist at Commerzbank.

The main point of interest later will be on monthly U.S. durable goods figures. The consensus in the markets is that headline orders rose by a monthly 1 percent in August

“It’s certainly been a choppy week for equity markets but the prospect of a double dip is looming yet again and those durable goods order readings ahead of the weekend break could easily inject another wave of pessimism should the number fall short of expectations,” said Ben Critchley, a sales trader at IG Index.

Most activity in the markets Friday centered on an apparent intervention in the currency markets by the Bank of Japan to stem the export-sapping appreciation of the yen.

Indications that the central bank was back in the market buying dollars and selling yen pushed the U.S. currency up from around 84.50 yen to over 85 yen. However, by late morning London time, the dollar was back where it started.

The dollar has been in retreat since Tuesday when the U.S. Federal Reserve indicated that it was ready to announce fresh measures to boost the flagging U.S. economy.

The markets are now anticipating that the Fed will turn on the taps once again at its next rate-setting meeting in early November, and that the fresh supply of dollars could lead to further weakness in the currency despite the slowdown in economic growth implicit within Thursday’s figures.

After falling Thursday following week eurozone data and renewed jitters about Ireland’s debt problems following news that the country shrank a further 1.2 percent in the second quarter, the euro was up 0.8 percent Friday at $1.3417.

Earlier in Asia, Japan’s Nikkei 225 stock average, which was closed Thursday, lost 1 percent to 9,471.67 as the strong yen pressured exporters.

Elsewhere, Hong Kong’s Hang Seng index rose 0.3 percent to 22,119.43 while Australia’s S&P/ASX 200 fell 0.7 percent to 4,601.90.

Benchmark crude for November delivery was up 9 cents at $75.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents to settle at $75.18 on Thursday.

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Associated Press Writer Alex Kennedy in Singapore contributed to this report.