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World markets mixed ahead of Bernanke speech

The Associated Press

LONDON —World stock markets were mixed Friday as investors readied for a speech from the U.S. Federal Reserve chairman that could give insight into plans for boosting the world’s largest economy.

Ben Bernanke is mostly expected to signal further monetary easing, as soon as next month, in order to lower interest rates and help growth. That has given a boost to equities in recent weeks but has also weighed heavily on the dollar, which is near 15-year lows against the Japanese yen and 9-month lows against the euro.

By late morning in Europe, Germany’s DAX was up 0.4 percent at 6,477.89 while Britain’s FTSE 100 was down 0.1 percent at 5,723.27. France’s CAC-40 was up 0.2 percent at 3,828.51.

Asian stocks were earlier helped by expectations that Beijing plans to boost domestic spending, with the Shanghai index jumping over 3 percent. Wall Street, meanwhile, was expected to open slightly higher — Dow futures were up 2 points at 11,054 while Standard & Poor’s 500 futures were up 0.2 point at 1,173.70.

Analysts said markets will react to Bernanke’s guidance over how and how much the Fed will loosen its monetary policy. Investors are expecting some stimulus, most likely in the form of asset purchases that will increase the amount of money in the system, though the size and timing remain unclear.

“That some guidance needs to be provided appears to be indisputable,” said Marc Ostwald, a strategist at Monument Securities in London.

Any changes in market expectations following Bernanke’s speech could have a particularly strong impact on the U.S. currency, which has depreciated rapidly in recent weeks on the view that the Fed will effectively put more dollars in circulation.

On Friday, the 16-nation euro rose as high as $1.4113 against the dollar, just below the $1.4121 it reached the previous day, its highest since late January. Against the Japanese currency, the dollar remained weak, buying 81.19 yen, off Thursday’s 15-year low of 80.94 yen.

The strong yen dampened sentiment in many Asian stock markets, bringing Japan’s benchmark Nikkei 225 stock average down 83.26 points, or 0.9 percent, to 9,500.29.

Some support was provided by hopes that China’s upcoming five-year plan will focus on increasing domestic spending power — a boost for the state-owned companies that dominate the stock market.

China’s benchmark index in Shanghai surged 3.2 percent to 2,971.16. Industrial & Commercial Bank of China Ltd., or ICBC, climbed 6.6 percent. China Vanke Co., the nation’s biggest property developer, added 1.6 percent.

“State-owned market heavyweights led the rise as investors believe in their good profitability in the long-term,” said Wei Daoke, an analyst at Shenyin & Wanguo Securities, in Shanghai.

Hong Kong’s Hang Seng index fell 0.4 percent to 23,757.63 and Australia’s S&P/ASX 200 closed down 0.2 percent at 4,689.00.

Elsewhere, Seoul’s Kospi rose 0.1 percent to 1,902.29 and Singapore’s stock gauge added 0.5 percent to 3,211.27. Benchmarks in Taiwan, India, Malaysia and Indonesia dropped.

To read more, visit: http://www.latimes.com/business/la-fiw-world-markets-20101016,0,6875552.story

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