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World markets in wait-and-see mode, cheered by Greek deal but looking to key US data
PARIS (AP) ' European markets were subdued on Friday, content that Greece has secured a debt reduction deal but cautious about the next steps in the debt crisis as well as key U.S. jobs data due later in the day.
Since for days it has seemed that Greece would manage to persuade the vast majority of its private bondholders to take a loss on those investments, wiping about euro100 billion ($130 billion) off Athens' tab, market reaction was muted.
Instead, investors turned their nervous attention to the next step: a decision later Friday about whether the bond-swap deal would trigger insurance payments on those bonds. Most analysts expect the insurance, known as credit default swaps, to be paid out.
The ability of banks that invested heavily in Greece to weather a default or major writedown has always been central to Europe's crisis. Although the bond insurance payouts are expected to be relatively small ' about $3.2 billion in total ' the uncertainty over who will take losses and who will be liable to make payments is making some investors cautious.
"The focus then will move on to who the winners and losers are from the CDS and of course, whether 'player X' has written enough CDS protection to take a major loss," said Kit Juckes of Societe Generale. "The sooner the uncertainty surrounding that issue is reduced, the better."
Later in the day, attention will move to the U.S., where new jobs figures will give an indication of whether the world's largest economy is continuing its steady, if slow, recovery. A stronger U.S. economy, the thinking goes, will help drive growth around the world.
Economists expect 200,000 jobs were added in February. If the unemployment rate falls from 8.3 percent, it will be the sixth straight decline.
An announcement Thursday that American unemployment claims rose last week has raised concerns that the economy might be stalling.
Some are also worried that surging oil prices could further dampen a recovery. Benchmark oil for April delivery rose 28 cents Friday to $106.87 in electronic trading on the New York Mercantile Exchange.
Ahead of Friday's data, European markets were cautious, and the euro fell 0.3 percent $1.3224.
The CAC-40 in France dropped 0.1 percent to 3,475, while Germany's DAX gained 0.2 percent to 6,847. The FTSE index of leading British shares pulled back 0.1 percent to 5,854.
Wall Street was also in a wait-and-see mode ahead of the open, edging down. Dow futures lost 0.1 percent to 12,384, while S&P futures pulled back 0.2 percent at 1,359.
Earlier, Asian markets were reassured by news that China's inflation fell sharply in February, giving Beijing more leeway to stimulate the world's No. 2 economy. Consumer price inflation fell to 3.2 percent from January's 4.5 percent.
That helped to offset any caution from the U.S. Labor Department report.
Japan's Nikkei 225 index closed up 1.7 percent to 9,929.74, its highest finish in more than seven months. It briefly surged past 10,000 for the first time since Aug. 1.
Hong Kong's Hang Seng added 0.9 percent to 21,086. South Korea's Kospi rose 0.9 percent to 2,018.30 and Australia's S&P/ASX 200 climbed 1 percent to close at 4,212. Benchmarks in Singapore, Taiwan and Indonesia also rose.
Mainland China's benchmark Shanghai Composite Index gained 0.8 percent to 2,439.46. The Shenzhen Composite Index shot up 1.6 percent to 995.87.
Pamela Sampson contributed to this report from Bangkok.