TOKYO - European shares were modestly higher Thursday as auto stocks bounced back from Volkswagen contagion and investors awaited a speech from the U.S. Federal Reserve chief. Asian markets were lackluster.
In early Europe trading, Germany's DAX gained 0.8 percent to 9,688.65 and Britain's FTSE 100 added 0.3 percent to 6,047.92. The CAC 40 of France was up 0.3 percent to 4,443.79.
Wall Street looked set for losses: Dow and S&P 500 futures were both down 1 percent.
Volkswagen AG extended gains following its CEO's resignation due to an emissions-rigging scandal, surging 7.2 percent in the aftermath of its dramatic slide earlier in the week. Audi AG jumped 3.6 percent and Renault SA rose 1.8 percent. In Asia, South Korea's Hyundai bounced back after taking the brunt of negative sentiment earlier in the week. Japanese automakers fell as they caught up with the news following a three-day public holiday. Toyota Motor Corp. dropped 1.9 percent, Nissan Motor Co. fell 2.5 percent and Honda shed 3.0 percent. Mazda slumped 6.8 percent.
Many investors are awaiting a speech on inflation and monetary policy Thursday by U.S. Federal Reserve chair Janet Yellen. Markets are looking for clues on the timing of the Fed's first interest-rate hike in nearly a decade after it held off raising the Fed Funds earlier this month. The Fed has rate-setting meetings in October and December.
Will Yellen "provide new information that could see the markets implied probability (of a rate hike this year) increase from the current level of 42 percent?" said IG chief strategist Chris Weston. "With this level of pricing, the Fed will not raise this year," he said in a market commentary.
In Japan, results of a preliminary monthly survey of manufacturers showed a sharp drop in new export orders that respondents attributed partly to weak demand in China. The reading of 50.9 for September was down from 51.7 in August, indicating a slower pace of expansion. Japanese media reported Prime Minister Shinzo Abe planned to announce fresh economic plans later in the day.
Japan's Nikkei 225 dropped 2.8 percent to 17,571.83 and Hong Kong's Hang Seng lost 1.0 percent to 21,095.98. South Korea's Kospi rose 0.1 percent to 1,947.10 and the Shanghai Composite Index gained 0.9 percent to 3,142.69. Australia's S&P/ASX 200 rose 1.2 percent to 5,060.10. Benchmarks in Taiwan, Thailand the Philippines were lower.
Benchmark U.S. crude was up 31 cents at $44.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.88 to close at $44.48 a barrel in New York on Wednesday after a weak Chinese manufacturing report. Brent, a benchmark for international oils, was up 29 cents to $48.77 a barrel in London.
The dollar slipped to 120.01 yen from 120.25 yen in the previous trading session. The euro ticked higher to $1.1188 from $1.1182.