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Stocks mostly down amid economic uncertainty


February 16. 2013 8:22PM
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(AP) World markets edged lower Wednesday as investors worried that Spain is inching closer to needing a full-blown bailout and wondered whether the economic news was bad enough to push central banks to act.


With many market players in wait-and-see mode, trading has been thin and erratic in recent days. Investors are cautious about taking risky bets with so many unclear signals on the direction of the economy.


The U.S. economy has shown some mild signs of rebound, but the recovery is far from robust, and investors wonder whether its sluggishness will be enough to push the Federal Reserve to unleash more stimulus. More information on the Fed's thinking will come later Wednesday, when the bank releases its "Beige Book" survey that sometimes gives insight into its decision-making. Also, Fed Chairman Ben Bernanke will give a speed in Jackson Hole, Wyoming, on Friday.


In Europe, the FTSE index of leading British shares fell 0.5 percent to 5,747. France's CAC-40 pulled back 0.7 percent to 3,409, while the DAX in Germany was down 0.6 percent at 6,960.


Markets are also waiting for a revision to U.S. economic growth figures from the second quarter. Expectations are that the economy grew slightly more than already announced. Perversely, investors might worry that better numbers makes the Fed less likely to act.


Ahead of the opening bell, stocks on Wall Street were set to move mostly sideways an indication of the uncertainty in markets. Dow futures were trading down 0.1 percent, while S&P futures were flat.


Investors are also trying to read the tea leaves on the European Central Bank, which has indicated it is ready to intervene in push borrowing costs lower for struggling countries but hasn't spelled out how or when it will act. President Mario Draghi canceled his trip to Jackson Hole on Tuesday, leading many to speculate the bank is drafting a plan of action.


Hopes for central bank action, however, were mostly overwhelmed by bad news. On Tuesday, the Spanish region of Catalonia asked for a 5 billion rescue loan. That's an added burden on the government in Madrid, which is trying to prop up sinking banks and restart growth and some fear it could push Spain's economy into its own bailout.


"For most of August little has been able to disturb the narrative of ECB action that is expected in September, but this morning that theory is under threat as one of the largest Spanish regions makes a request for assistance from Madrid," said Chris Beauchamp, a market analyst at IG Index.


The euro fell 0.05 percent to $1.2558, while the yield, or interest rate on Spain's benchmark 10-year bond rose to 6.48 percent. That's a sign that investors want a bigger return to lend the country money.


Earlier in Asia, stocks were mixed. The Tokyo Stock Exchange's benchmark Nikkei rose 0.4 percent to 9,069.81 and South Korea's Kospi added 0.6 percent to 1,928.54. Hong Kong's Hang Seng Index turned 0.1 percent lower at 19,788.51. Australia's S&P/ASX 200 lost nearly 0.1 percent to 4,356.04.


Benchmarks in Singapore and Taiwan rose, while Indonesia and Thailand fell.


On mainland China, the Shanghai Composite Index lost 1 percent to 2,053.24 its lowest closing in more than three years. The Shenzhen Composite Index lost 0.6 percent to 851.14.


Benchmark oil for October delivery fell 69 cents to $97.13 per barrel in electronic trading on the New York Mercantile Exchange.


___


Fu Ting in Shanghai and Youkyung Lee in Seoul, South Korea, contributed to this report.


Associated Press


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