Markets volatile on conflicting manufacturing data

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By PAN PYLAS, Associated Press

LONDON (AP) — A fairly rosy manufacturing survey in the U.S. helped shore up markets Monday following a volatile day when conflicting figures from around the world raised questions over the state of the global economic recovery.

At certain times of the day, the more optimistic investor found reasons to be hopeful — while, at other times, the pessimist had the upper hand.

The conflicting signals were particularly evident in China. One manufacturing survey eased fears over the scale of the slowdown in the world's second largest economy while another indicated that the downturn was getting worse.

An equivalent report about the state of the sector in Europe reinforced fears over a recession in the 17-country eurozone. Figures showing that unemployment in the 17 countries that use the euro rose to 10.8 percent in February, its highest level since the euro was launched in 1999, reinforced recession concerns.

However, a better-than-expected monthly Institute for Supply Management survey about the manufacturing sector in the U.S. helped lift markets into the Wall Street session. The institute's main index for March rose to 53.4 in March, up from 52.4 in the previous month and just ahead of expectations for a more modest increase to 53.0.

"The ISM data largely fits with the global picture that is fairly flat, with some loss of any recovery momentum in the euro area," said Alan Ruskin, an analyst at Deutsche Bank.

In Europe, the FTSE 100 index of leading British shares was up 1.85 percent at 5,874 while Germany's DAX rose 1.5 percent to 7,056. The CAC-40 in France was 1.1 percent higher at 3,462. The euro though remained under pressure, trading 0.27 percent lower at $1.3325.

On Wall Street, the Dow Jones industrial average was up 0.5 percent at 13,279 while the broader Standard & Poor's 500 index was 0.83 percent lower at 1,420.

In the first quarter of the year, stock markets around the world posted solid gains as Europe's debt crisis seemingly eased following a big liquidity injection from the European Central Bank and a raft of forecast-busting U.S. economic figures.

However, Kathleen Brooks, research director at Forex.com, said stocks will face bigger headwinds in the second quarter as investors concentrate on growth and the future direction of central bank policy.

"While stocks won't fall precipitously, expect some pretty big pullbacks especially in European markets," said Brooks.

Economic indicators around the world will be the primary point of interest in the markets this week. The U.S. will increasingly attract attention in the run-up to Friday's nonfarm payrolls figures for March.

Earlier in Asia, stocks generally edged higher.

Though markets in mainland China were closed for a public holiday, the main indexes elsewhere started the second quarter positively. Japan's Nikkei 225 index gained 0.3 percent to close at 10,109.87 despite businesses remaining pessimistic in the central bank's latest quarterly "tankan" survey. Hong Kong's Hang Seng fell 0.2 percent to 20,522.26.

Oil prices started the day tracking European stocks lower, but the benchmark New York rate rose $1.43 later on in the day to $104.35 a barrel.

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Pamela Sampson in Bangkok contributed to this report.

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