Global shares directionless amid poor Europe data

Pedestrians are reflected on the window of a security company flashing Tokyo stock's closing rate in Tokyo on July 2, 2013. The benchmark Nikkei 225 index closed up 1.78 percent or 246.24 points at 14,098.74, lifted by brighter economic data from the United States and Japan while a weakening yen also provided support. AFP PHOTO / TOSHIFUMI KITAMURA (Photo credit should read TOSHIFUMI KITAMURA/AFP/Getty Images) TOSHIFUMI KITAMURA

PARIS Global shares struggled to find direction Tuesday as indications Europe's economy is still in trouble competed with hopes that the U.S. central bank wasn't quite finished with its stimulus.

Industrial producer prices fell 0.3 percent in May in the 17 European Union countries that use the euro, Eurostat reported Tuesday. While that shows costs are falling, it also indicates manufacturing activity remains weak.

Meanwhile, Spain announced Tuesday that the number of people registered as unemployed dropped for a fourth consecutive month in June -- but the country has a long way to go to bring its jobless rate down to normal levels. It currently stands at 27.2 percent.

A separate report on Monday showed the unemployment rate in the eurozone was at 12.1 percent in May, its highest level ever.

"While the European economy appears to be starting to show flickers of recovery particularly in Spain and Italy where the manufacturing sector appears to be showing signs of coming off life support, the unemployment picture remains disturbingly high," said Michael Hewson, a market analyst at CMC Markets UK.

By midday in Europe, France's CAC-40 was down 0.9 percent to 3,735 while the DAX in Germany was off 1.2 percent to 7,885. The FTSE index of British shares dropped 0.6 percent at 6,269.

By contrast, lackluster data in the U.S. comforted American and many Asian markets over the past day -- since it indicated the U.S. Federal Reserve would move slowly to reduce its purchases of financial assets that have buoyed markets by pushing down interest rates.

On Monday, Wall Street rallied after an ISM manufacturing survey for the U.S. that showed a weak rebound in June thanks to new orders and higher production. The survey boosted stock markets as investors estimated it was strong enough to show the recovery is on track, but not so strong as to encourage the Fed to start ending its monetary stimulus program ahead of time.

U.S. markets were expected to open higher Tuesday. Dow and S&P futures were both up 0.2 percent, at 14,914 1,610.20 respectively.

Many Asian stocks rose earlier in the day. Tokyo's Nikkei 225, the region's heavyweight index, jumped 1.8 percent to 14,098.74. Australia's S&P/ASX 200 was up 2.6 percent at 4,834.00 after the country's central bank left interest rates unchanged and said the Australian dollar is likely to continue falling, easing pressure on exports.

In China, the Shanghai Composite Index reversed early losses to rise 0.6 percent to 2,006.56 after reports on Monday that Chinese manufacturing weakened in June amid a credit crunch. Hong Kong's Hang Seng fell 0.7 percent to 20,658.65, led by Chinese banks, which are facing central bank credit restrictions.

Meanwhile, benchmark oil for August delivery rose 16 cents to $98.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.43 to close at $97.99 a barrel on Monday.

The euro fell to $1.3030 from $1.3065 late Monday in New York.

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