European and Asian Stocks Fall as Dollar Weakens
Published: September 9, 2009
LONDON (AP) -- European stocks recovered from early losses Wednesday, helped by a surge in auto stocks. Asia closed lower after a drop in the dollar hit exporters' confidence, while little change was expected on Wall Street at the open.
The U.S. dollar hit new lows for the year against the euro and was near a two-month low against the yen. That helped oil prices jump and kept gold above $1,000 an ounce.
Germany's DAX was up 0.7 percent to 5,522.07 and Britain's FTSE 100 gained 0.9 percent to 4,991.32. France's CAC-40 rose 0.6 percent to 3,682.76.
All of them had been lower in the morning, but upbeat comments from carmakers pushed auto stocks sharply higher.
Wall Street was expected to show less momentum on the open. Dow Jones industrial average futures were up less than 0.1 percent to 9,497 while Standard & Poor's 500 futures rose 0.1 percent to 1,025.90.
Europe's recovery was helped by statements by Carlos Ghosn, CEO of Renault-Nissan, who told French daily Le Figaro that ''the financial crisis is clearly behind us'' and said the auto sector would see further consolidation.
He said financing conditions have normalized and believes that consumer demand has recovered sufficiently to withstand the removal of government stimulus -- such as ''cash for clunkers'' programs.
That struck a chord with investors, who have been worried that the end of such stimulus measures could cause a second recession.
Renault shares jumped 6.6 percent and Peugeot 4.7 percent. In neighboring Germany, BMW jumped 5.6 percent and Daimler 2.4 percent.
Earlier in Asia, indexes had dropped, as its export-heavy economies -- like those in Europe -- suffered from the weaker dollar, which makes it harder for them to sell in the U.S.
The dollar recovered only some of its previous day's losses against the yen, edging up to 92.28 yen from 92.26 yen late Tuesday. The euro, meanwhile, continued to rise, hitting a new high for 2009 at $1.4555.
The dollar -- a typical safe haven -- has been hurt by a rise in stock markets and a general improvement in investors' risk appetite after world governments said they would continue to support the global recovery and corporate merger activity picked up.
Still, analysts are not sure how far the dollar can fall, particularly since doubts still linger about the strength of recovery in world economies.
''It has been said that it is better to be mad with the rest of the world than wise alone. This is certainly relevant to foreign exchange markets at the moment,'' said Daragh Maher, analyst at Calyon.
''The truly level-headed will be booking profits early and constantly reassessing,'' he said.
The weaker dollar has had the added effect of causing commodity prices like oil and gold to jump higher.
Benchmark crude oil for October delivery gained $3.08 overnight and was up another 81 cents to $71.91 a barrel by mid-afternoon European time in electronic trading on the New York Mercantile Exchange.
Oil traders were watching closely an OPEC meeting in Vienna, although oil ministers have repeatedly said that the producer group is unlikely to change its production levels.
Gold has likewise shot higher, rising above the $1,000 per ounce mark Tuesday for the first time since February and trading at $1,001.00 per ounce, up $1.20, on the New York Mercantile Exchange on Wednesday.
Peter Lai, investment manager at DBS Vickers in Hong Kong, said gold is likely to continue to rise if the dollar weakens any further, as that would make the precious metal more affordable in other countries.
In Asia, the Nikkei 225 stock average closed down 0.8 percent at 10,312.14, while South Korea's Kospi retreated 0.7 percent to 1,607.77.
Automakers and other exporters got hit hardest, although their markets closed before the auto sector rally started in Europe. Toyota Motor Corp., the world's biggest carmaker, closed down 1.8 percent and Hyundai Motor Co. shed 5.8 percent in Seoul.
Hong Kong's Hang Seng declined 1 percent to 20,851.04. China's benchmark Shanghai index recovered losses to gain 0.5 percent to 2,946.26, while Australia's main index closed marginally lower.