KUALA LUMPUR, Malaysia - World stock markets extended losses Thursday after an apparent budget deal in the U.S. Congress reinforced expectations the Federal Reserve will cut its monetary stimulus as early as next week.
In Europe, Britain's FTSE 100 fell 0.4
percent to 6,479.49. Germany's DAX shed 0.4 percent to 9,044.86 and France's
CAC-40 was nearly flat at 4,086.31.
Futures suggested Wall Street would
eke out gains after disappointing earnings from a handful of U.S. companies
pushed the stock market to its biggest loss in five weeks on Wednesday. Dow
Jones and S&P 500 futures were both up 0.1 percent.
U.S. lawmakers look set to agree on a
modest U.S. budget agreement that restores about $63 billion in
across-the-board automatic spending cuts and would help prevent another partial
shutdown of the U.S. government. The 16-day shutdown in October crimped
economic growth and hurt consumer confidence.
Mizuho Bank Ltd. in Singapore said the
budget deal, coupled with a strong run of U.S. economic data, raised the
probability of the Fed cutting, or tapering, its $85 billion of monthly bond
purchases when it meets Dec. 17-18.
"December taper still remains on
the table though not our base scenario. We maintain our view that the Fed would
need more data to confirm that the economy is strengthening. As such, we think
taper could more likely start in March 2014," it said in a market
The stimulus has kept U.S. interest
rates low to encourage economic recovery, and sent a flood of money into stock
markets worldwide in search of higher returns. Its potential pullback has
jolted markets and added to nervousness in emerging nations about sudden capital
Some analysts also said the budget
deal doesn't prevent another standoff among lawmakers over the debt ceiling,
which has to be raised by early February if the U.S. is to avoid defaulting on
Earlier in Asia, Japan's Nikkei 225
lost 1.1 percent at 15,341.82 and Hong Kong's Hang Seng dropped 0.5 percent to
23,218.12. China's Shanghai Composite eased 0.1 percent to 2,202.80. Markets
were also down in Australia, India, Taiwan and Southeast Asia.
Benchmark U.S. crude for January
delivery was down 5 cents to $97.39 a barrel in electronic trading on the New
York Mercantile Exchange. The contract shed $1.07 to close at $97.44 on
The euro fell to $1.3775 from $1.3784
late Wednesday. The dollar rose to 102.77 yen from 102.48 yen.