Tuesday, June 18, 2013

Uncertainty over US stimulus drags shares lower

A worker stretches on a chair during a morning trading at the Tokyo Stock Exchange in Tokyo Monday, June 17, 2013. Asian stocks edged up Monday amid hopes that the U.S. Federal Reserve will put off plans to wind down its stimulus program. Tokyo's Nikkei 225, the regional heavyweight, jumped 2.2 percent to 12,960.81, extending Friday's 2.4 percent gain. (AP Photo/Koji Sasahara)

A worker stretches on a chair during a morning trading at the Tokyo Stock Exchange in Tokyo Monday, June 17, 2013. Asian stocks edged up Monday amid hopes that the U.S. Federal Reserve will put off plans to wind down its stimulus program. Tokyo's Nikkei 225, the regional heavyweight, jumped 2.2 percent to 12,960.81, extending Friday's 2.4 percent gain. (AP Photo/Koji Sasahara)

A visitor is seen at Tokyo Stock Exchange during a morning trading in Tokyo Monday, June 17, 2013. Asian stocks edged up Monday amid hopes that the U.S. Federal Reserve will put off plans to wind down its stimulus program. Tokyo's Nikkei 225, the regional heavyweight, jumped 2.2 percent to 12,960.81, extending Friday's 2.4 percent gain. (AP Photo/Koji Sasahara)

A visitor takes a picture at Tokyo Stock Exchange during a morning trading in Tokyo Monday, June 17, 2013. Asian stocks edged up Monday amid hopes that the U.S. Federal Reserve will put off plans to wind down its stimulus program. Tokyo's Nikkei 225, the regional heavyweight, jumped 2.2 percent to 12,960.81, extending Friday's 2.4 percent gain. (AP Photo/Koji Sasahara)

TOKYO (AP) ? Jitters over a possible change in U.S. stimulus efforts by the Federal Reserve helped pull share prices mostly lower in early Asian trading Tuesday.

Asia's biggest benchmark, Japan's Nikkei stock average, shed early gains to fall 0.6 percent by mid-morning in choppy trading, to 12,956.78. Hong Kong's Hang Seng index dropped 0.7 percent to 21,075.01, while South Korea's KOSPI index rose 0.1 percent to 1,885.77.

Japanese shares have tended to gain as the yen falls, on expectations a weaker currency will help heavyweight exporters like Toyota Motor Corp. and Sony. Early Tuesday, the dollar was at 94.80 yen, compared with 94.99 yen late Monday in New York. The euro was steady at 1.336.

Shares had climbed on growing expectations that the U.S. Federal Reserve will maintain its current policy stance when policymakers meet this week. But that optimism appears to be wavering.

"There is still some selling pressure but overall the markets are sidelined. Investors are quite cautious about the Federal Reserve meeting," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "The market will wait."

Markets have gyrated in recent weeks on worries the Fed might choose to start cutting back on the volume of its financial asset purchases, which are intended to encourage spending and investment by helping to keep interest rates low.

Investors were spooked when Fed chairman Ben Bernanke suggested the U.S. central bank might ease its aggressive support for the U.S. economy if indicators, especially hiring, improve.

Markets across Asia were hit by sharp drops in share prices as investors pulled back from emerging markets.

Shares were mostly lower early Tuesday, also losing ground in mainland China and Australia. Shares rose in Singapore, Taiwan, Indonesia and New Zealand.

A meeting of leaders from the Group of Eight top industrial countries in Northern Ireland appeared to be having little impact on the markets given the gathering's main focus on diplomatic issues such as Syria and North Korea.

In Europe overnight, the FTSE 100 index of leading British shares ended Monday up 0.35 percent at 6,330 while Germany's DAX rose 1.1 percent to 8,215. The CAC-40 in France was 1.5 percent higher at 3,863.

In the U.S., the Dow Jones industrial average gained 0.7 percent to 15,179.85 while the broader S&P 500 index rose 0.8 percent to 1,639.04.

Oil prices rose ahead of the Fed's meeting, with the benchmark New York rate up 3 cents at $97.80. The contract fell 8 cents to finish at $97.77 a barrel on the Nymex on Monday.

In currencies, the euro rose to $1.3355 from $1.3340 late Monday in New York. The dollar fell to 94.77 yen from 94.86 yen.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2013-06-17-World%20Markets/id-ea8448ed610f496e9af35fe201b454b5

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