World stocks drop amid signs eurozone in recession

SARAH DiLORENZO
A visitor touches Italian-American artist Arturo Di Modica's new Charging Bull statue, which is a similar version of his Wall Street Bull Thursday Aug. 30, 2012 in Shanghai, China. Shares fell Thursday in Asia, as positive news on U.S. economic growth dashed hopes for fresh measures by the Federal Reserve, and gloomy retail sales in Japan deepened concern over its recovery. (AP Photo/Eugene Hoshiko)

PARIS (AP) — World stock markets drifted Thursday as investors continued their long wait for economic stimulus and a survey of European sentiment suggested the region was heading for recession.

A successful bond sale in Italy — which eased concerns that the country's borrowing rates are spiraling out of control — wasn't enough to buoy markets, although the euro made modest gains. The currency shared by 17 countries rose 0.1 percent to $1.2547.

In Europe, Germany's DAX closed down 1.64 percent to 6,895. The FTSE index of leading British shares, meanwhile, fell 0.4 percent to 5,719, and France's CAC-40 dropped 1 percent, to 3,379.

Trading has been light this week as investors await a speech Friday from an economic conference by Fed Chairman Ben Bernanke that they hope will indicate Washington is preparing more measures to jump-start the economy. However on Wednesday, the U.S. Federal Reserve's "Beige Book" survey of economic sentiment was fairly positive, damping hopes of further action.

The American economy seems to be in an inconvenient middle spot: not growing fast enough to drive down unemployment and spur a global rally, but likely not doing poorly enough to persuade the Fed to step in again.

Stocks on Wall Street fell in midday trading. Dow Jones Industrial Average traded 0.7 percent lower at 13,000, while S&P 500 was down the same percentage to 1,400. Higher spending by US consumers in July and strong sales by retailers like Target and Costco in August were not enough to lift investors' gloom.

Europe, on the other hand, is mired in bad news. August's Economic Sentiment index fell more than expected and suggested eurozone growth could retreat 2 percent this year.

"The survey revealed falls in sentiment in the consumer, services and manufacturing sectors, confirming that the downturn is related to both domestic demand and exports," said Jennifer McKeown, senior European economist for Capital Economics. "And perhaps more worryingly, there is further evidence here of a sharp slowdown in Germany."

Earlier in Asia, the benchmark Shanghai Composite Index dropped to another three-year low on Thursday, losing 0.03 percent to 2,052.58.

Elsewhere, the Tokyo Stock Exchange's benchmark Nikkei fell 1 percent to 8,983.78 and South Korea's Kospi slipped 1.2 percent to 1,906.38. Hong Kong's Hang Seng Index also was down 1.2 percent to 19,545.93, while Australia's S&P/ASX 200 shed 0.9 percent to 4,315.70.

Benchmarks in Singapore, Indonesia and Taiwan also fell.

Concerns about the economy are driving down the price of only since less growth typically means lower demand for energy. Benchmark oil for October delivery fell $1.15 cents to $94.34 per barrel in electronic trading on the New York Mercantile Exchange.

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Elaine Kurtenbach in Tokyo contributed to this report.