European stocks find footing as oil regains lost ground

TOKYO - European shares made modest gains in early trading Wednesday as oil prices stabilized after their recent rout and Japan reported stronger-than-expected machinery orders. Asian markets were mostly lower.

Britain's FTSE 100 rose 0.4 percent to 6,159.36 and France's CAC 40 gained 0.6 percent to 4,711.71. Germany's DAX added 0.3 percent to 10,706.80.

Wall Street looked set for a muted open: Dow futures were flat and S&P 500 futures declined 0.2 percent.

Oil prices rose after major losses on Monday, with U.S. crude oil gaining 64 cents, or 1.7 percent, to $38.15 in electronic trading on the New York Mercantile Exchange. It fell 14 cents to $37.51 on Tuesday, near a seven-year low. Brent crude, the international benchmark, rose 50 cents to $40.76 in London. But muted demand and oversupply are still hanging over the energy markets, analysts said.

Volatility in the junk bond market is largely being driven by the collapse in oil prices, Angus Nicholson of IG said in a commentary. With no relief in sight, "the debt-laden and marginal energy players are increasingly likely to be pushed to the verge of bankruptcy. This has driven up junk bond yields and in turn weighed on the equity markets," he said.

In Japan orders for machinery, which tend to be a relatively volatile indicator for corporate investment, jumped 10.7 percent from the previous month in October. Data showed strong foreign demand and surging orders for railway cars and aircraft.

Japan's Nikkei 225 fell 1.0 percent to 19,301.07, despite the upbeat machinery data, and Hong Kong's Hang Seng lost 0.5 percent to 21,803.76. Australia's S&P/ASX 200 dropped 0.6 percent to 5,080.50. South Korea's Kospi was barely changed at 1,948.24 and the Shanghai Composite Index rose 0.1 percent to 3,472.44. Most markets in Southeast Asia were lower.

The U.S. dollar was trading at 122.71 yen, down from 122.99 yen in the previous session. The euro rose to $1.0911 from $1.0888.