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World stocks fall ahead of EU summit
World stocks fall ahead of EU summit as US growth figure disappoints investors
By The Associated Press

BANGKOK (AP) ' World stock markets fell Monday, with uncertainty about a tentative deal to resolve Greece's debt crisis weighing on investor sentiment ahead of a summit of European leaders.

Benchmark oil slipped to near $99 per barrel while the dollar rose against the euro but fell against the yen.

Stock markets opened lower in Europe, where leaders gathering in Brussels for a summit on taming the continent's financial crisis were met by a nationwide strike that hobbled trains and other public transportation.

Britain's FTSE 100 fell 0.5 percent to 5,707.50 and Germany's DAX lost 0.6 percent to 6,470.18. France's CAC-40 shed 0.6 percent to 3,298.07. Wall Street was also headed for a lower open, with Dow Jones industrial futures falling 0.4 percent to 12,559 and S&P 500 futures down 0.5 percent to 1,305.50.

Losses began earlier in Asia, with the investment mood dampened by Friday's release of data showing the U.S. economy grew more slowly than expected in the last three months of 2011. The economy grew at an annual rate of 2.8 percent in the October-December quarter, lower than the 3 percent that economists were expecting.

Japan's Nikkei 225 index shed 0.5 percent to close at 8,793.05. South Korea's Kospi was 1.2 percent lower at 1,940.55 and Hong Kong's Hang Seng dropped 1.7 percent to 20,160.41. Australia's S&P/ASX 200 lost 0.4 percent at 4,272.70.

Benchmarks in mainland China, Singapore, Indonesia, India and the Philippines also fell. Taiwan and New Zealand rose.

European leaders were to meet later Monday in Brussels to discuss austerity and belt-tightening measures as well as a tentative deal reached Saturday between Greece and its private investors that could avert a disastrous Greek default on its debt.

If the deal holds and works, it will help prevent a potential shock to the world banking system. But it doesn't resolve the weakening economic conditions in Greece and other European nations as they rein in spending to get their debts under control.

Stan Shamu of IG Markets in Melbourne said that "the Greece debt issues will remain a source of uncertainty and might dampen the risk mood ahead of the EU summit today."

Under the agreement, investors holding 206 billion euros ($272 billion) in Greek bonds would exchange them for bonds with half the face value. The replacement bonds would have a longer maturity and pay a lower interest rate.

The deal would reduce Greece's annual interest expense from about 10 billion euros to about 4 billion euros. When the bonds mature, Greece would have to pay its bondholders only 103 billion euro.

Some analysts said stocks were taking a breather after post-New Year rallies in several markets that were spurred by signs of improvement in the U.S. economy and Europe's debt crisis stabilizing. Hong Kong's Hang Seng, for example, is up more than 11 percent since the beginning of the year. Australia's S&P/ASX 200 is 5.7 percent higher.

"Probably it's a case of the market getting a little bit tired. We've had quite a significant rally now, and that's been based on some news that was mildly encouraging out of Europe," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"But we may have arrived at a level where the market will need a bit further concrete evidence and news to continue the rally," Spooner said.

Shares of CNK International, a South Korean mineral development company, plunged 14.9 percent after company executives were implicated in a stock manipulation scheme, Yonhap News agency said.

Japan's Mitsubishi Electric Corp. plummeted 14.8 percent after the Defense Ministry and the Cabinet Satellite Intelligence Center said they would not sign contracts with the electric machinery manufacturer, which acknowledged it had overcharged on defense and space-related projects, Kyodo News agency reported.

Traders are awaiting more data this week for clues about which way the U.S. economy is headed. On Wednesday, the Institute for Supply Management will release its manufacturing index for January. The Labor Department will release monthly employment data Friday.

"Because the market has been expecting rather good economic data from the U.S. ... I am afraid if those figures disappoint the market, it may trigger further correction in the stock market," said Louis Wong, dealing director of Phillip Securities Ltd.

Benchmark oil for March delivery was down 49 cents to $99.07 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 14 cents to end at $99.56 per barrel on the Nymex on Friday.

In currencies, the euro fell to $1.3145 from $1.3208 late Friday in New York. The dollar fell to 76.67 yen from 76.72 yen.

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