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World stocks unsteady ahead of Bernanke speech

World stock markets are unsteady today ahead of a speech by US Federal Reserve Chairman Ben Bernanke, in which he will outline whether the Fed will take new steps to help the US economy avoid another recession.

Image: AP Photo/J. Scott Applewhite

WORLD STOCK MARKETS were unsteady Friday as investors waited to see whether Federal Reserve Chairman Ben Bernanke would promise new steps to help the US economy ward off another recession.

Oil prices lingered below $85 a barrel while the dollar was down against the yen and the euro.

European shares were lower in early trading. Britain’s FTSE 100 dropped 0.9 percent to 5,086.29. Germany’s DAX shed 2.1 percent to 5,466.94 and France’s CAC-40 slipped 0.9 percent to 3,089.88.

Japan’s Nikkei 225 swung between gains and losses throughout the day before closing with a 0.3 percent gain at 8,797.78. South Korea’s Kospi rose 0.8 percent after a volatile morning to 1,778.95.

Hong Kong’s Hang Seng gave up early gains and fell 0.9 percent to 19,582.88. Benchmarks in Australia, Singapore and the Philippines were also lower while stocks in mainland China were mixed.

Trading was jittery as investors waited to see if Bernanke offers more support for the US economy when he delivers a highly anticipated speech at a conference later Friday in Jackson Hole, Wyoming.

The Fed has already pledged low interest rates through to 2013. Some central bank watchers say the Fed has reached the limits of what a central bank can do to aid an economy that is beleaguered by problems that monetary policy can’t fix — high unemployment and massive government debt.

“The market is very volatile on low trading volume. Any news can be a big thing,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

Worries that the US could be headed for another recession have in recent weeks caused huge volatility in equities, bonds and foreign exchange. The US Commerce Department, meanwhile, is expected to lower its estimate of April-June economic growth in revised figures due for release Friday.

Some shares weakened on the heels of disappointing earnings reports. Air China Ltd. slid 4.3 percent after the company on Friday announced its first-half profit fell 12 percent as soaring fuel costs offset strong revenue growth.

PetroChina Ltd., China’s biggest oil and gas company, dropped 3.6 percent, a day after the company said its first-half profit was nearly flat as losses in its refining business eroded gains from higher oil and gas output.

But bank stocks got a boost after billionaire investor Warren Buffett said he would invest $5 billion in troubled Bank of America, the largest U.S. bank.

Hong Kong-listed Industrial & Commercial Bank of China, the world’s biggest bank by market value, rose 1.4 percent. Japan’s Mitsubishi UFJ Financial Group gained 0.6 percent.

Mainland Chinese shares were mixed with the benchmark Shanghai Composite Index edging 0.1 percent lower to 2,612.19, after dipping almost 1 percent earlier in the day. The smaller Shenzhen Composite Index gained 0.3 percent to 1,169.95.

Shares in plastic, pesticides and fertilizer companies led the advance while shares in cement, coal, oil and food-related companies weakened.

“The market is behaving pretty well today despite the weakness in the U.S. and Europe. It could still rise in the short term, but I am worried there may be no strong momentum of support,” said Yang Yiniang, an analyst at Capital-edge Investment & Management Co. in Shanghai.

On Thursday, the US government reported an increase in the number of people applying for unemployment benefits last week. The Labor Department said applications rose to 417,000, the highest in five weeks.

The Dow Jones industrial average closed down or 1.5 percent at 11,149.82. The S&P 500 fell 1.6 percent to 1,159.27. The Nasdaq fell 1.9 percent to 2,419.63.

In currency trade, the euro rose to $1.4436 from $1.4368 late in New York on Thursday. The dollar slipped to 76.98 yen from 77.55 yen.

Benchmark oil for October delivery was down 31 cents to $84.99 in electronic trading on the New York Mercantile Exchange. Crude rose 14 cents to finish at $85.30 on Thursday. In London, Brent crude for October delivery was down 19 cents to $110.43 on the ICE Futures exchange.

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