news European stocks drop ahead of G-20 meeting

[rwilli1]

European stocks drop ahead of G-20 meeting



2 hours, 58 minutes ago




By Pan Pylas, The Associated Press


LONDON - European stock markets fell Wednesday despite earlier gains in Asia amid ongoing pessimism surrounding the Group of 20 summit of world leaders and concerns about the future of U.S. carmakers General Motors Corp. and Chrysler.

The FTSE 100 of leading British shares was 15.40 points, or 0.4 per cent, lower at 3,910.74 while Germany's DAX slipped 32.95 points, or 0.8 per cent, to 4,051.81. The CAC-40 in France was 40.58 points, or 1.5 per cent, lower at 2,766.76.

Most investors around the world have their eyes glued on London where the leaders from the world's 20 leading industrial and developing nations are gathering to thrash out a new framework and rules for the global economy.

Tensions have been heightened in the run-up to the meeting with French President Nicolas Sarkozy threatening to walk out of the meeting instead of signing any communique he considers too vague and diluted.

Sarkozy and German Chancellor Angela Merkel, who has also dismissed the need for a further fiscal stimulus above what has already been decided, will be holding a press conference later and investors will be looking to see if their tone is more conciliatory.

In their press conference earlier, President Barack Obama and British Prime Minister Gordon Brown sought to dampen talk that a split has emerged between their respective countries and continental Europe.

Brown said the G-20 was only hours away from agreeing to historic global reforms of the financial system.

Whatever the diplomatic wrangles and discussions, the stakes are high and the markets could sink faster should the G-20 fail to at least present a united front at the conclusion of the meeting on Thursday.

"In what is clearly an historic phase in financial market history, the group's failure to - be seen to - come together might well constitute an untimely blow to sentiment, just one day before a predictably poor U.S. non-farm payrolls report," said Neil Mellor, an analyst at Bank of New York Mellon.

"With the future of the U.S. auto industry hanging in the balance, a 'damp squib' from the group may prove historically significant for all the wrong reasons," he added.

Investors are closely eying faltering American car companies General Motors and Chrysler - their fate hanging in the balance as a government deadline to restructure looms.

"Sixty days for GM to get its act together and 30 days for Chrysler to do the same is simply not enough time," said David Buik, senior strategist at BGC Partners.

In the U.S. overnight, the Dow rose 86.90 points, or 1.2 per cent, to 7,608.92, while the broader Standard & Poor's 500 index added 10.34 points, or 1.3 per cent, to 797.87. European benchmarks also closed higher.

Wall Street was headed for a modestly lower open Wednesday as U.S. futures lost ground. Dow futures were down 71 points, or 0.9 per cent, while S&P 500 futures were down 7.8 points, or 1 per cent, at 787.

In Asia earlier, the Tokyo's Nikkei 225 stock average rose 242.38 points, or 3 per cent, to 8,351.91, despite a very weak Tankan business survey, while Hong Kong's Hang Seng index fell 56.48 points, or 0.4 per cent, to 13,519.54.

Elsewhere in Asia, South Korea's Kospi added 2.3 per cent to 1,233.36 while stock measures in Taiwan and India were higher by nearly 2 per cent.

Shanghai's key index climbed 1.5 per cent to hit a seven-month high as investors brushed off a new survey, by brokerage CLSA Asia-Pacific Markets, showing manufacturing shrank for an eighth month in March. Analysts said investors had already factored in such possible bad news.

Oil prices fell, with the May contract for benchmark crude off $1.22 at $48.31 in European trade on the New York Mercantile Exchange. Overnight, the contract rose $1.25 to settle at $49.66.

In currencies, the dollar gave up some of its gains to soften to 98.96 yen from 99.17 yen, while the euro slipped to $1.3249 from $1.3257.

-