Most Asian markets sag modestly on grim US jobs report; Europeans shares open lower

By Jeremiah Marquez, The Associated Press

HONG KONG - Most Asian markets fell Friday as a weaker-than-expected U.S. jobs report signalled more pain ahead for the world's largest economy. European stocks also weakened in early trade.

Losses across Asia were somewhat tame compared to Wall Street, where markets pulled sharply lower. Oil prices slipped further after tumbling on Thursday.

Optimism about the U.S. economy, a critical market for Asian-made goods, buckled after the government said employers slashed 467,000 jobs in June. That was far worse than the 363,000 that economists predicted and marked the first increase in monthly jobs losses since January. At the same time, the unemployment rate hit 9.5 per cent, the highest since 1983.

Investors have sent markets surging in recent months after the global economy flickered to life as companies began restocking their inventories and international trade picked up modestly.

But the dreary news about America's labour market just reinforced worries that a strong recovery in the U.S. economy, even if the recession officially ends this year, was unlikely anytime soon.

"The fundamentals of the economy are still not sound," said Arjuna Mahendran, head of Asian investment strategy at HSBC Private Bank in Singapore. "You're going to see less and less of these green shoots."

Mahendran said equity markets could fall between 15 per cent and 20 per cent in the coming months.

Early going in Europe, Britain's FTSE 100 edged down 0.1 per cent, while the major benchmarks in Germany and France declined 0.4 per cent. Wall Street futures weakened slightly.

Asian markets, after starting in the red, managed to trim some of their losses.

Japan's Nikkei 225 stock average dropped 60.08, or 0.6 per cent, to 9,816.07, and Hong Kong's Hang Seng closed up 25.35 points, or 0.1 per cent, to 18,203.40 after trading in the red most of the day.

Australia's benchmark fell 1.4 per cent, and Singapore's main index finished down 1 per cent.

China's Shanghai Composite index was largely flat. In Korea, the Kospi rebounded to close up 0.6 per cent.

India's Sensex gained 0.8 per cent in afternoon trading after the government said Thursday the economy could grow by as much as 7.5 per cent this year if the U.S. recession bottoms out by September

Despite recent losses, global markets just wrapped up one of their strongest quarters in years. India, China and other emerging markets were among the best performers as investors' appetite for growth and riskier assets returned.

For the second quarter, global investors channelled a whopping US$26.5 billion into funds that focus on equities in developing markets, according to a survey by EPFR Global, a Boston-based firm that tracks global fund flow data. That eclipsed the previous record for a single quarter, the $22.4 billion such funds attracted in the fourth quarter of 2007.

U.S. markets are closed Friday in observance of the Independence Day holiday.

Oil prices rose in light holiday trading volume after tumbling the day before as disappointing job numbers in the U.S. and Europe raised concerns about demand. Benchmark crude for August delivery fell 46 cents to $66.27 a barrel.

In currencies, the dollar was flat at 95.92 yen. The euro rose moderately to $1.3996 from $1.3951 late Thursday in New York.