LONDON - Global stocks fell on Friday after a drop in eurozone inflation showed the recovery is still weak there and concern persisted over the outlook for emerging economies.
Official figures showed the inflation
rate in the 18-country eurozone dropped to 0.7 percent in December from 0.9
percent the previous month. That is far below the European Central Bank's
target of just under 2 percent and has raised expectations of a rate cut next
The "data maintain the pressure
on the ECB to do more to ward off deflation risks, perhaps as soon as next
week," said Jonathan Loynes, chief
European economist at Capital Economics.
The figures added to jitters in
markets over developing economies. Many of them have seen their currencies
slide sharply over the past week on concerns that growth will slow and money
will flow out of their economies as the U.S. Federal Reserve tightens its
monetary policy, draining on global liquidity.
By midday in Europe, Germany's DAX was
down 1.5 percent at 9,236.11 while France's CAC-40 fell 0.9 percent to
4,139.54. Britain's FTSE 100 was 0.9 percent lower at 6,482.55.
Wall Street was expected to open lower
as well, with both the Dow and S&P 500 futures down 0.6 percent.
Among emerging economies, markets were
also downbeat, particularly among currencies. The Turkish lira and the South
African rand fell again, by 0.6 percent and 1 percent, respectively.
Earlier, in Asia, many markets were
closed for the Lunar New Year holidays.
Japan's Nikkei 225, the main index
still trading, reversed early gains that were sparked by reported increases in
inflation and factory output. Inflation is a possible sign of economic recovery
in Japan, which has been plagued by falling prices during two decades of
But a rise in the yen against the U.S.
dollar was negative for exporting stocks, dragging the Nikkei down 0.6 percent
to 14,914.53. The dollar was down 0.5 percent against the yen, at 102.20 yen.
Financial markets were closed in
China, Hong Kong, South Korea, Taiwan, Indonesia, Singapore, Malaysia and the
Among stock markets not observing the
holiday, India's Sensex gained less than 0.1 percent to 20,504.69 and
Thailand's SET was up 0.4 percent at 1,269.19. Australia's S&P/ASX 200
added less than 0.1 percent to 5,190 and New Zealand's benchmark gained 0.5
percent to 5,258.40.
Benchmark U.S crude for March delivery
was down 43 cents at $97.80 a barrel in electronic trading on the New York
Mercantile Exchange. The contract gained 87 cents on Thursday.
In currencies, the euro was flat at