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World stock markets muted as Spain's borrowing costs jump amid bailout fears
BANGKOK (AP) ' Another jump in Spain's borrowing costs weighed on world stock markets Monday amid fears one of Europe's biggest economies could eventually need a bailout.
Benchmark oil fell to near $102 a barrel as tensions over Iran's nuclear program eased following weekend talks. The dollar strengthened against the euro but fell against the yen.
The most recent worries in Europe are concentrated on Spain and Italy. The yield on Spain's 10-year government bonds shot past the 6 percent mark Monday amid doubts its harsh austerity plans will be effective in reducing its debt mountain. Italy's borrowing rate rose to 5.52 percent last week.
The rising yields mean those countries will have to pay more to borrow money and could force more cuts in government spending. That would hinder growth that is needed to extricate Europe from its debt morass.
European shares were mixed. Britain's FTSE 100 fell 0.5 percent to 5,679.95. Germany's DAX gained 0.2 percent to 6,595 and France's CAC-40 added 0.4 percent to 3,201.57.
Wall Street was headed for a higher opening, with Dow Jones industrial futures gaining 0.2 percent to 12,816 and S&P 500 futures rising 0.2 percent to 1,367.70.
Most key benchmarks in Asia fell. Japan's Nikkei slid 1.7 percent to close at 9,470.64, bruised by a higher yen.
South Korea's Kospi was down 0.8 percent at 1,992.63 after the Bank of Korea lowered its 2012 economic growth outlook to 3.5 percent, from a December estimate of 3.7 percent, Yonhap news agency reported.
Hong Kong's Hang Seng fell 0.4 percent to 20,610.64 and Australia's S&P/ASX 200 lost 0.5 percent to 4,302.30. Benchmarks in Singapore, Taiwan, and Indonesia also fell.
Mainland Chinese shares edged lower, with the benchmark Shanghai Composite Index down 0.1 percent to 2,357.03. The Shenzhen Composite Index lost 0.2 percent to 949.23.
"The losses (in China) were mainly due to lower electrical power data released Monday showing an obviously slower economic growth outlook. The market might be unstable in the short-term," said Peng Yunliang, an analyst based in Shanghai.
Data on Friday showed the Chinese economy grew at an 8.1 percent pace in the January-March period, the slowest in almost three years. That compared with 8.9 percent growth in the fourth quarter.
Still, some analysts said the figure was in line with government expectations and that the world's No. 2 economy shouldn't be expected to grow at a feverish pace when economies elsewhere are slowing.
"It may be slowing but that's because the world in general is slowing. You can't expect China's growth to be 9 percent, 9.5 percent," said Tom Kaan of Louis Capital Markets in Hong Kong. He said that measures to stimulate the U.S. economy seemed to be producing results.
"I still believe this is a good opportunity to buy. Fundaments have not changed for the USA," he said. "Europe problems are returning, but not in a big way."
A week of earnings reports begin in the U.S. on Monday. Citigroup Inc. and toymaker Mattel Inc. will report quarterly financial results.
Benchmark oil for May delivery was down 61 cents to $102.22 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 81 cents to finish at $102.83 per barrel on the Nymex on Friday.
Iran met Saturday in Istanbul with representatives from the U.S., China, Russia, Britain, France and Germany in a bid to ease fears that Tehran may seek to build nuclear weapons. Officials said the talks began with a positive tone, in contrast to the previous round 14 months ago, which ended without progress.
In currency trading, the euro fell to $1.3011 from $1.3081 late Friday in New York. The dollar fell to 80.64 yen from 81.10 yen.
AP researcher Fu Ting contributed from Shanghai.