World stock markets mixed as oil price falls

World stock markets were mixed Wednesday despite encouraging signs that include falling oil prices, better-than-expected machinery orders in Japan and an overnight climb on Wall Street.

Oil prices fell to near $104 a barrel after Kuwait’s oil minister said that OPEC members are in informal talks over raising oil output as the conflict in Libya — which sits atop Africa’s largest proven reserves of conventional crude oil — continues. In currencies, the dollar rose against the yen and the euro.

Stocks in Europe were generally headed lower in early trading. Britain’s FTSE 100 was slightly down to 5,972.01, while Germany’s DAX was up 0.1 percent at 7,173.06. France’s CAC-40 slipped 0.2 percent to 4,007.81.

Wall Street was likely to lose some momentum, with Dow Jones industrial futures down 0.1 percent to 12,187 and S&P 500 futures off 0.2 percent at 1,317.80.

Japan’s Nikkei 225 stock average gained 0.6 percent to close at 10,589.50, with sentiment lifted after the government announced that machinery orders rose 4.2 percent in January from the previous month.

The result beat Kyodo news agency’s average market forecast of 2.9 percent and indicated a recovery in manufacturing. The data includes engines, turbines, heavy electrical machinery and communications equipment but excludes orders for ships and electric power companies, which tend to be volatile.

South Korea’s Kospi rose 0.3 percent to 2,001.47 and Hong Kong’s Hang Seng added 0.4 percent to 23,810.11. Falling oil prices hurt energy companies — state-owned oil giant PetroChina Ltd. was down 1 percent, and CNOOC Ltd., China’s largest offshore oil producer, dropped 0.3 percent. Sinopec, China’s largest oil refiner, lost 0.5 percent.

But airline shares made up recently lost ground, including flagship carrier Korean Air Lines Co. Ltd., which rose 1 percent, and the country’s second-largest carrier, Asiana Airlines, up 1.5 percent.

Cathay Pacific Airways Ltd., Hong Kong’s biggest airline, jumped 4.5 percent after announcing that it is ordering 27 new Airbus and Boeing jets to expand services, especially in Asia. Cathay also said full-year profit for 2010 tripled to a record 14.05 billion Hong Kong dollars ($1.8 billion) from 4.69 billion Hong Kong dollars in 2009.

Meanwhile, Mainland Chinese shares edged higher in thin trading, as investors awaited the release of February inflation data on Friday.

The Shanghai Composite Index was virtually unchanged, adding just 2.21 points to 3,002.15, while the Shenzhen Composite Index of China’s smaller, second exchange gained 0.3 percent to 1,311.34.

“Even if the consumer price index for February is smaller than the month before, inflation remains a serious problem and there might an interest rate hike or other tightening measures in March, which will affect the market both psychologically and actually,” said Liu Kan, an analyst at Guoyuan Securities, in Shanghai.

With crude oil prices still relatively high, buying of shares in other resources, such as coal, is helping buoy prices on speculative trading, Liu said. China Shenhua Energy Co. Ltd., the country’s biggest coal producer, rose 0.6 percent on the Hong Kong exchange.

Benchmarks in Australia, Singapore, India and New Zealand fell.

Markets remained on edge as the violent rebellion against Libyan leader Moammar Gadhafi risked spreading to other crude producers in the region, especially oil powerhouse Saudi Arabia. About 1 million barrels a day of Libya’s 1.6 million capacity has been shut down because of the crisis, and there are fears of uprisings elsewhere in North Africa and the Middle East.

“With so many open fronts, additional oil disruptions cannot be ruled out due to contagion risk. For example, unrest in Bahrain is likely to increase the risk of social unrest spreading into Saudi Arabia or Iran,” Bank of America Merrill Lynch said in a report.

“When assuming no contagion, the risk of further disruptions appears slim. However, when assuming some degree of contagion, the probability of further supply disruptions becomes very meaningful,” the report said.

In New York on Tuesday, lower oil prices also helped stocks move higher. The Dow Jones industrial average gained 124.35 points, or 1 percent, to 12,214.38. The broader S&P 500 rose 11.69, or 0.9 percent, to 1,321.82.

Financial stocks in the S&P 500 index rose 2.2 percent, the most of any of the index’s 10 company groups. The Nasdaq composite rose 20.14, or 0.7 percent, to 2,765.77.

In currencies, the dollar rose to 82.80 yen from 82.65 yen late Tuesday. The euro fell to $1.3870 from $1.3903.

Benchmark crude for April delivery was down 66 cents to $104.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 42 cents to settle at $105.02 a barrel on Tuesday. Oil prices have dropped back after nearly hitting $107, the highest level since Sept. 26, 2008, on Monday.

Source: AP