World stocks down after Obama's tough talk on Iran

BANGKOK (AP) — World stock markets fell Monday as tough talk by President Barack Obama over Iran's nuclear program and uncertainty over Greece's ability to clear the next hurdle in its debt reduction plan unnerved investors.

Benchmark oil hovered below $107 per barrel while the dollar gained against the euro but fell against the yen.

Key stock indexes in Europe fell in early trading. Britain's FTSE 100 lost 0.3 percent to 5,893.10 and Germany's DAX shed 1.2 percent to 6,832.46. France's CAC-40 was 0.7 percent lower at 3,476.37.

Wall Street was headed for a lower opening, with Dow Jones industrial futures down 0.5 percent 12,907 and S&P 500 futures 0.5 percent lower to 1,361.80.

Benchmarks in Asia recoiled as investor enthusiasm wilted.

Japan's Nikkei 225 index fell 0.8 percent to 9,698.59 and South Korea's Kospi dropped 0.9 percent to 2,016.06. Hong Kong's Hang Seng lost 1.4 percent to 21,265.31. Australia's S&P/ASX 200 eased 0.2 percent to 4,263.

Benchmarks in Taiwan, Singapore and Indonesia also fell. Mainland Chinese shares were mixed, with the Shanghai Composite Index closed down 0.6 percent to 2,445 and the smaller Shenzhen Composite Index marginally higher at 981.20.

In a speech Sunday, President Barack Obama said he would not hesitate to attack Iran to keep it from getting a nuclear bomb, hoping to dissuade Israel from launching a unilateral strike that could ignite a Middle East war.

But he also pleaded for time for diplomacy to work, stressing that military force was a last resort, not the next option at a time when sanctions are squeezing Iran.

Still, markets reacted nervously to the message that force remains an option.

"Markets are likely to begin the week in cautious mood on the back of US President Obama's tough speech on Iran nuclear problem," analysts at Credit Agricole CIB in Hong Kong said in an email.

Uncertainly over a definitive solution to Greece's long-standing debt crisis also kept investors at bay.

The Greek Finance Ministry says the country's debt-reducing bond swap with private creditors is expected to take place on March 12. At least 66 percent of private sector bondholders must be willing to participate in the deal, the minimum number to make the deal viable.

Athens last week took the first concrete steps toward making sure that a small number of holdouts cannot scupper the deal. The Greek parliament is expected to introduce so-called collective action clauses, which would force holdouts to participate in the bond swap as long as a majority of investors approve.

Other headwinds in Europe stem from Spain, whose prime minister said Friday that the country will miss its deficit goal for this year, risking sanctions from the European Union. The announcement came as the government reported a big rise in claims for jobless benefits and a forecast that economic output will fall this year.

Louis Wong, director of Phillip Securities Ltd. in Hong Kong, said markets were in a holding pattern head of the release of U.S. jobs data for February on Friday and a meeting Thursday of the European Central Bank, which is under pressure to reduce interest rates to help a waning eurozone economy.

"The market is taking a pause after the recent rally," Wong said. "Various central banks are having their interest rate meetings this week, and also the U.S. will release a batch of economic data."

Benchmark oil was down 5 cents to $106.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.14 to finish at $106.70 per barrel on Friday.

In currencies, the euro fell to $1.3166 from $1.3204 late Friday in New York. The dollar fell to 81.27 yen from 81.81 yen.