European woes weigh on world markets

AMSTERDAM (AP) -- World stock markets were mixed Thursday, as disappointing news about German economic growth dragged shares in Europe and the U.S. lower.

Asian markets closed higher and European stocks had been following them until figures from the European data service Eurostat were released. They showed the economy across the 17 European Union countries that use the euro fell 0.6 percent in the final three months of 2012. In particular, Germany's decline was worse than expected.

It appears to be suffering from weakness in the other European economies it exports to, which are taking painful austerity measures to lower debt.

"With increased uncertainty stemming from the euro crisis and the global economic cooling in the second half of the year, the German economy has finally lost its invincibility," said ING Senior Economist Carsten Brzeski. "Looking ahead, however, there is increasing evidence that the economy should pick up speed again" later in the year, he predicted.

Germany's DAX was the biggest loser, closing 1.1 percent lower at 7,631.19. Britain's FTSE 100 shed 0.5 percent to 6,327.36, while France's CAC-40 fell 0.8 percent to3,669.60.

Wall Street shares were lower, though both corporate and macroeconomic news gave some reasons for optimism.

The Labor Department said weekly unemployment applications dropped to a seasonally adjusted 341,000, the lowest level in three weeks, while a $23 billion bid led by Warren Buffett's Berkshire Hathaway Inc. for H.J. Heinz Co. showed the renowned investor still believes some blue-chip stocks are undervalued.

Dow Jones industrial index was down 0.1 percent to 13,968.60, while the broader S&P 500 was down fractionally at 1,519.68.

Asian stock markets finished mostly higher, ahead of a meeting this weekend of finance ministers of the Group of 20 major advanced and developing nations in Moscow.

Japan's Nikkei 225 index rose 0.5 percent to close at 11,307.28, brushing aside data showing the Japanese economy shrank for a third straight quarter in the last three months of 2012.

Investors believe the yen's recent weakness will boost company earnings — and there will be more to come.

The Bank of Japan ended a policy meeting Thursday with no new initiatives, which was the expected outcome ahead of an impending leadership change at the central bank.

But its governor Masaaki Shirakawa, who has appeared at odds with Prime Minister Shinzo Abe's views, is resigning next month, giving the government an opportunity to find a successor more sympathetic to Abe's push for ultra-loose monetary policy.

South Korea's Kospi rose 0.2 percent while Australia's S&P/ASX 300 advanced 0.7 percent largely due to gains in the resource sector. Hong Kong's Hang Seng added 0.9 percent. Markets in Singapore and the Philippines fell while mainland China and Taiwan remained closed for Lunar New Year holidays.

Francis Lun, managing director of Lyncean Holdings in Hong Kong, said the local market was being led higher by financial stocks on "a rumor" that Chinese banks would be given permission to increase lending.

The Hang Seng, reopening after a three-day holiday, displayed no sign of distress over North Korea's underground nuclear test that took place Tuesday.

"Unless they throw a nuclear bomb at South Korea or Japan, nobody thinks much of it," Lun said.

Benchmark oil for March delivery was up 0.5 percent to $97.48 per barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the euro fell to $1.3337 from $1.3447 late Wednesday in New York. The dollar was weaker against the yen, falling to 93.03 yen from 93.48 yen.

_____

Pamela Sampson contributed to this story from Bangkok.