World stocks in pause a year after rally started

LONDON: World stock markets traded in very narrow ranges Tuesday as investors took a breather a year after shares began their recovery from multiyear lows.

In Europe, the FTSE 100 index of leading British shares was down 11.06 points, or 0.2 percent, at 5,595.66 while France's CAC-40 was flat at 3,903. Germany's DAX rose 3.53 points, or 0.1 percent, to 5,879.44.

On Wall Street, the Dow Jones industrial average was up 7.48 points, or 0.1 percent, at 10,560 soon after the open while the broader Standard & Poor's 500 index rose 0.75 point, or 0.1 percent, to 1,139.25.

With little on the economic and corporate calendar to drive shares, many analysts said it was unsurprising that they have fallen all day in Europe.

"It would not be a surprise to see further gradual drift for shares from current levels, unwinding at least some of the strong gains seen over the past month," said David Jones, chief market strategist at IG Index.

Despite worries about the debt crisis in Greece and mixed economic news, stocks have continued to edge higher over the last month or so — a clear sign that the bull market that started a year ago today has not run out of steam yet.

Over the past 12 months, most of the world's major stock market indexes have spiked by more than 50 percent — a year ago, the Dow index had fallen to a low of 6,469 while the S&P 500 had dropped to 666.

ECU Group chief economist Kit Juckes said much will hinge on whether the S&P 500 can break above its previous peak of 1,150.

"This level could see a lot of nervousness form both bears and bulls but ultimately, with rates going nowhere, the weight of money looking for better returns will probably see a further move higher," said Juckes.

Not everyone is so upbeat, especially as history shows that rallies often generally run out of steam in the second year following a cyclical low.

"The market's rebound has been impressive, but even if the S&P index edges a little higher in the near term, we expect to see it back down around 1,000 by the end of the year," said John Higgins, senior markets economist at Capital Economics.

Higgins said company valuations are "not compellingly attractive" and cautioned that the gradual scaling back of special liquidity measures introduced by the world's biggest central banks to stave off the worst effects of the financial crisis would likely "curb investors' appetite for risk" even if borrowing costs don't change.

In addition, he said the economic recovery was likely to run out of steam before too long, especially as much of the recovery from recession has been due to companies rebuilding their inventories.

What newsflow there was Tuesday was generally disappointing.

Defense and aerospace company EADS NV saw its share price drop nearly 5 percent after it said spiraling costs on its military transport plane and its A380 superjumbo led to losses in the fourth quarter and full year.

Financial shares were somewhat weaker after Moody's credit ratings agency said the withdrawal of stimulus measures would leave some banks in Britain fragile. Royal Bank of Scotland was down 2.2 percent and Lloyds Banking Group fell 1.8 percent. Lower commodity prices, meanwhile, weighed on mining stocks.

Fitch Ratings warned that the governments in Portugal and Britain still had more to do over the coming months to convince that they had got a handle on their mounting debt burdens — but no ratings changes were announced.

Greece got cautious backing from Fitch analyst Chris Pryce — he said the package of measures announced last week by the government meant the country was "probably ok" in the near term but that in the longer term "concerns" remained.

Greek Prime Minister George Papandreou is due to meet President Barack Obama later to discuss stricter regulations on hedge funds and currency traders that Athens believes aggravated their crisis.

Pledges of support for Greece from France and Germany over the weekend lacked concrete details, and investors will keep an eye on the country's financial markets — particularly the rate at which is can raise money on capital markets — for signs that confidence in being restored.

Earlier, Asian indexes closed little changed. Tokyo's Nikkei 225 stock average fell 0.2 percent 10,567.65 while Hong Kong's Hang Seng added 0.1 percent to 21,207.55 and South Korea's main benchmark edged up 0.1 percent to 1,660.83.

Oil prices slipped below $81 a barrel, losing momentum after a monthlong run-up fueled by growing investor optimism about global economic growth. Benchmark crude for April delivery was down 93 cents to $80.94 a barrel after adding 37 cents overnight.

The euro was 0.4 percent lower at $1.3580 while the dollar fell 0.4 percent to 89.88 yen.