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Thai stocks sink on coup, other world markets gain

Associated Press
A passer-by looks at an electronic stock board of a securities firm in Tokyo, Friday, May 23, 2014. Japan's Nikkei 225 was up 0.9 percent at 14,473.19 after the dollar climbed to near 102 yen overnight. A weaker yen is a plus for Japan's powerhouse export manufacturers. (AP Photo/Koji Sasahara)
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BANGKOK (AP) — Thailand's stock market sank Friday, a day after the country's military seized power in a nonviolent coup. Other world stock markets were mostly higher but Europe's gains were tempered as a polarized Ukraine braced for weekend elections.

In early European trading, Germany's DAX rose 0.2 percent to 9,738.08 and France's CAC 40 rose 0.1 percent to 4,484.16. Britain's FTSE 100 shed 0.2 percent to 6,806.33.

Ukraine's presidential election could add to already high tensions between Russia and the West over the country's tilt toward the European Union. Fighting continued Friday in Ukraine's east between pro-Russia insurgents and government forces two days before the election that may result in a runoff vote in June.

Futures pointed to more modest gains on Wall Street before the Memorial Day long weekend. Dow futures were up 0.1 percent to 16,537 and S&P 500 futures added 0.1 percent to 1,891.50.

In Asia, Bangkok's SET index fell more than 2 percent in early trading before moderating its losses to close down 0.6 percent at 1,396.84. Thailand's currency stabilized after falling about 0.4 percent against the dollar after the coup was announced early Thursday evening.

The relatively muted market reaction to the military takeover reflects that foreign investors had substantially reduced their holdings of Thai stocks during the past six months of protests aimed at unseating the elected government. Net selling of stocks by foreigners is about $640 million so far this year, according to stock exchange data.

Bombings and lawlessness have bruised Thailand's capital and the military says the coup, which is the second in Thailand in eight years, is needed to restore stability. The army is vowing political reforms but also risks worsening the crisis if its seizure of power inflames the opposing political camps.

The coup is regarded as an "extremely negative development" by almost all observers, said Michael Every, head of financial markets research in Asia for Rabobank. It is possible an insurgency will begin in the country's north and northeast where support for the ousted government is strongest, he said.

The backdrop of potential instability and violence will weigh on the already struggling Thai economy and put pressure on its baht currency, Every said.

Elsewhere in Asia, Japan's Nikkei 225 closed up 0.9 percent at 14,462.17 after the dollar climbed to near 102 yen overnight. A weaker yen is a plus for Japan's powerhouse export manufacturers.

Hong Kong's Hang Seng gained 0.5 percent to 22,965.86 and Australia's S&P/ASX 200 added 0.2 percent to 5,492.80. South Korea's Kospi rose 0.1 percent to 2,017.

In energy trading, benchmark U.S. crude for July delivery was up 11 cents at $103.85 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 33 cents on Thursday.

In currencies, the euro fell to $1.3620 from $1.3656 late Thursday. The dollar rose to 101.85 yen from 101.79 yen.

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