Asia stocks drop as ECB vow of action falls flat

Associated Press
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A woman holding a parasol walks past an electronic stock board of a securities firm in Tokyo Friday, Aug. 3, 2012. Japan's Nikkei 225 stock average was down 1.2 percent at 8,553.68 on Friday as Asian stock markets fell after the European Central Bank's policy meeting failed to deliver on bold promises of action to overcome the region's prolonged debt crisis. (AP Photo/Koji Sasahara)

BANGKOK (AP) — Asian stock markets fell Friday after the European Central Bank's policy meeting failed to deliver on bold promises of action to overcome the region's prolonged debt crisis. Shares in Europe rose after big falls the day before.

A week after vowing to do whatever it takes to keep the euro common currency intact, ECB President Mario Draghi had only more promises and nothing concrete to announce.

Attention is now turning to the monthly U.S. payrolls report due later Friday which provides a closely watched indicator of how the world's biggest economy is faring. U.S. hiring was likely sluggish in July for a fourth straight month, held back by slower economic growth and an uncertain outlook Analysts forecast that employers added 100,000 jobs last month, according to a survey by FactSet.

Japan's Nikkei 225 stock average finished down 1.1 percent at 8,555.11 and Hong Kong's Hang Seng was 0.2 percent lower to 19,652.50. Australia's S&P/ASX 200 shed 1.1 percent to 4,221.50 and South Korea's Kospi dropped 1.1 percent to 1,848.68. The Shanghai Composite rose 1 percent to 2,132.80.

In early European trade, Britain's FTSE 100 rose 0.6 percent to 5,694.86 and Germany's DAX added 0.9 percent to 6,666.37. France's CAC 40 climbed 1.4 percent to 3,278.93. Wall Street was set to gain with Dow futures up 0.5 percent and S&P 500 futures up 0.6 percent.

Investors had hoped the ECB would resume purchases of government bonds to lower the borrowing costs of financially struggling countries such as Spain and announce other measures to calm a crisis that is dragging down global economic growth.

But Germany, which is Europe's biggest economy, is opposed to the ECB operating outside its mandate to control inflation and wants any government bond purchases to be financed by other funds set up to deal with the crisis.

The problem with the German approach, some analysts say, is that Europe's bailout funds lack the firepower to make much of a difference if the financial situation in a big economy such as Spain or Italy dramatically worsens.

A surge in Spain's borrowing costs early last week underlined that a bailout of one of Europe's largest economies is probably unaffordable and could splinter the common currency.

"Draghi made some big statements last week about what the ECB can and cannot do and, well, Germany begs to differ," said analysts at DBS Bank in Singapore.

"The bottomline is that a lot has to happen for the euro to 'get saved' and Draghi's big statements last week didn't move the continent or the markets any closer to that conclusion."

In energy trading, benchmark crude was up 91 cents at $88.04 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.78 to close at $87.13 on Thursday in New York.

The dollar was little changed at 78.21 yen. The euro was up 0.3 percent at $1.222.