World stocks sink on US fiscal cliff fears

Associated Press
A currency trader watches monitors in front of screens showing the Korea Composite Stock Price Index (KOSPI), center, and foreign exchange rate, left, at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Thursday, Nov. 8, 2012. South Korea's Kospi dropped 1.19 percent at 1,914.43. (AP Photo/Ahn Young-joon)
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A currency trader watches monitors in front of screens showing the Korea Composite Stock Price Index (KOSPI), center, and foreign exchange rate, left, at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Thursday, Nov. 8, 2012. South Korea's Kospi dropped 1.19 percent at 1,914.43. (AP Photo/Ahn Young-joon)

World stock markets struggled Friday despite encouraging Chinese economic figures as fears persisted over the so-called U.S. "fiscal cliff" that's seen as a big threat to the economic recovery.

In early European trading, the FTSE 100 index of leading British companies was down 0.3 percent at 5,757.69 while Germany's DAX was 0.7 percent lower at 7,152.63. The CAC-40 in France slipped 0.1 percent to 3,404.89.

U.S. stocks were also poised to edge down on the open. Dow futures were down 0.1 percent to 12,759 while the broader S&P 500 futures were down the same rate at 1,373.80. Asian markets closed lower.

Markets have slumped worldwide as investors have refocused on challenges to the world economy following President Barack Obama's re-election. Many worry that gridlock in Washington will prevent the president and Congress from reaching a deal before $800 billion of tax increases and government spending cuts kicks in on Jan. 1.

Investors also have renewed fears about Europe's lingering debt crisis. European Central Bank President Mario Draghi warned that the economy of the 17 nation grouping that uses the euro remains weak and will struggle to grow even with "visibly improved" confidence among the currency union's financial markets.

Those fears offset somewhat upbeat indicators in China that provided signs of a possible recovery in the world's second-largest economy. The latest data showed that Chinese factory output rose, investment growth strengthened and inflation eased in October.

Looking ahead, investors will focus on consumer sentiment survey out of the U.S. Analysts say the University of Michigan consumer sentiment index will likely dip because of the impact of Superstorm Sandy, but remain at relatively strong levels.

Japan's Nikkei 225 index fell 0.9 percent to close at 8,757.60 and Hong Kong's Hang Seng shed 0.9 percent to end at 21,384.38. South Korea's Kospi retreated 0.5 percent to 1,904.41.

The Shanghai Composite Index closed down 0.1 percent to 2,069.07 and the Shenzhen Composite Index edged 0.4 percent lower to 828.46.

Australia's S&P ASX 200 dropped 0.5 percent to 4,462.00 after the central bank released a downbeat assessment of the country's economy.

Australian stocks fell after the country's central bank said in a quarterly report it was trimming growth forecasts as mining companies scale back investment plans because of declining iron ore and coal prices and the strong currency.

In currencies, the euro weakened to $1.2723 from to $1.2750 late Thursday. The dollar was roughly unchanged against the Japanese yen at 79.22 yen.

Crude oil for December delivery was down 48 cents to $84.61 in electronic trading on the New York Mercantile Exchange. The contract rose 65 cents to close at $85.09 on Thursday.

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