HONG KONG (AP) — Global stock markets drifted Wednesday as news the Federal Reserve's vice chair will be nominated to head the U.S. central bank gave only a slight lift to investor sentiment darkened by an IMF warning on the global economy.
The White House said President Barack Obama would nominate Janet Yellen to succeed Ben Bernanke. She's a close ally of Bernanke and has been as a key architect of Fed efforts under his leadership to keep interest rates close to record lows to bolster the world's biggest economy, so her selection is seen as a sign that the policy will likely continue.
The yen weakened and Japanese stocks rose but otherwise market reaction was mostly muted since Obama had been widely expected to tap Yellen after front-runner and former Treasury Secretary Lawrence Summers withdrew his candidacy.
"I think it's more politics than reality, but it's slightly positive for investor sentiment, certainly," said Andrew Sullivan, director of Asian sales trading at Kim Eng Securities.
"Yellen is very much in the same camp as Bernanke, so we're not going to see any major policy change. That's the relief to the market."
European stocks fell in early trading. Britain's FTSE 100 shed 0.3 percent to 6,344.63. Germany's DAX was marginally down at 8,550.16. France's CAC-40 was 0.1 percent lower at 4,129.52. However, Wall Street looked set for gains, with Dow Jones industrial futures rising 0.2 percent to 14,742 and S&P 500 futures gaining 0.3 percent to 1,654.70.
Some investors were getting edgier as the deadline drew closer for Congress to raise the U.S. government's borrowing limit. A failure to raise the so-called debt ceiling by Oct. 17 would raise the possibility of a U.S. debt default, which has the potential to seriously roil global markets. Political wrangling over spending has already left the U.S. government partially shut for eight days.
The International Monetary Fund also weighed in, warning about the harm to the global economy if the U.S. failed to raise its borrowing limit, as it cut its global economic growth forecasts for 2013 and 2014.
Sullivan said even though there's little chance that the U.S. could end up defaulting, investors are paying so much attention to the debt limit because there's "very little" other market-moving news, especially as U.S. companies go into a blackout period ahead of third-quarter earnings.
Asian stocks finished somewhat mixed. Japan's Nikkei rose 1 percent to close at 14,037.84 as the dollar strengthened against the yen.
But Hong Kong's Hang Seng index fell 0.6 percent to 23,033.97. Australia's S&P ASX 200 edged marginally higher to 5,153. Benchmarks in Taiwan, the Philippines and New Zealand fell but Singapore's and Indonesia's rose. South Korea's Kospi was closed for a holiday.
The euro fell to $1.3523 from $1.3602 late Tuesday. The dollar rose to 97.37 yen from 96.85 yen.
Benchmark crude for November delivery fell 26 cents to $103.23 a barrel. The contract rose 46 cents to settle at $103.49 on Tuesday.