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Holidays and Chinese Rates Fight for Traders’ Attention
World Markets Roundup | December 28, 2010

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Global bourses were mostly lower on Tuesday as investors continued to worry about a recent interest rate rise in China and stayed on the sidelines ahead of the release of key United States home price data.

In European trade, the main boards in France and Germany traded in narrow ranges, now more than three tenths of one percent up or down. Stock markets in Britain and several Asian countries were closed for a holiday.

Investors, with little news to focus on during the holiday period, are still bogged down by fears over the effect of China’s rate hike announced over the weekend, analysts said.

“I think it’s a sudden attack by bears in a very quiet situation,” said Alex Wong, director at Ample Financial Group. “Sentiment was still cautious, people are still liquidating mainland banks and also mainland motor-vehicle stocks. Mainland property stocks remain weak, as well.”

Higher interest rates would make it more expensive for people to borrow money to buy homes. Beijing aims to tame inflation, which jumped to 5.1 percent in November, a 28-month high.

China motor-vehicle stocks have been dragged down in recent days after an announcement last week that traffic-clogged Beijing would sharply limit new vehicle registrations.

Markets are swinging in wide ranges because not many trades are being done, Wong said.

“A few big orders can move the market right now.”

China’s Shanghai Composite Index fell 1.7 percent while Hong Kong’s Hang Seng index shed 0.9 percent. Japan’s benchmark Nikkei 225 stock average declined 0.6 percent.

Elsewhere, South Korea’s Kospi rose 0.5 percent. Shares in Singapore were higher while those in Thailand and India traded in a narrow range. Markets in Australia and New Zealand were closed for the Boxing Day holiday officially observed Tuesday.

In currencies, the dollar fell to 82.38 yen in Tokyo Tuesday from 82.78 yen in New York late Monday. The euro edged up to $1.3233 from $1.3164.

Benchmark oil for February delivery rose 13 cents to $91.13 in electronic trading on the New York Mercantile Exchange.

  World Markets Roundup

AP, JG