Stock gains limited by US budget talks uncertainty

  • Article by: CARLO PIOVANO
  • Associated Press
  • November 30, 2012 - 5:48 AM

LONDON - Uncertainty over whether U.S. leaders can resolve a critical budget deadlock and figures showing the eurozone's unemployment rate at a record high capped any gains to be made in the markets Friday.

Investor sentiment had been buoyed this week by upbeat reports on the U.S. economy, including economic growth and consumer confidence. But markets failed to sustain their rally as trading became increasingly focused on the halting talks between the White House and Congress on a new budget deal.

The two sides need an agreement to avoid the so-called fiscal cliff of spending cuts and tax increases due to start Jan. 1 unless a deal is reached to cut the budget deficit. Failure to resolve the issue will hurt the U.S. economy, the world's largest, threatening global growth.

Republican House Speaker John Boehner on Thursday rebuffed a proposal by President Barack Obama because it lacked "sensible spending cuts." The tenor of the remarks suggested the hard bargaining was about to begin. Four weeks remain before the year-end deadline and negotiations such as these often don't gel until time is running out.

By midday in Europe, Britain's FTSE 100 was 0.1 percent higher at 5,877.85 while Germany's DAX rose 0.3 percent to 7,424.31. France's CAC-40 gained 0.2 percent to 3,574.87.

European markets were supported by news that the German parliament approved the latest bailout deal for Greece, which cuts the country's debt burden and gives it new rescue loans. However, optimism was blunted by new statistics showing unemployment in the 17 EU countries that use the euro rose to a new record high of 11.7 percent in October.

While the rise in the jobless rate was largely anticipated, it highlights the dire state of the currency bloc's economy.

Wall Street was headed for a cautious open, with Dow Jones industrial futures rising less than 0.2 percent to 13,040 and S&P 500 futures 0.1 percent higher at 1,417.

Earlier, in Asia, Japan's Nikkei 225 index rose 0.5 percent to close at 9,446.01 after the Japanese government released an 880.3 billion yen ($10.7 billion) stimulus package.

Hong Kong's Hang Seng added 0.5 percent to 22,030.39 and Australia's S&P/ASX 200 advanced 0.6 percent to 4,506. South Korea's Kospi fell 0.1 percent to 1,932.90. Benchmarks in Taiwan, Singapore, mainland China and New Zealand also rose. Indonesia fell.

Benchmark oil for January delivery was up 11 cents to $88.18 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to close at $88.07 on Thursday on the Nymex.

In currencies, the euro rose to $1.3005 from $1.2972 Thursday in New York. The dollar rose to 82.63 yen from 82.15 yen.


Pamela Sampson in Bangkok contributed to this report.

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