Nov 12, 2014 8:30 AM
Stocks turn lower, but China shares jump
The Associated Press
HONG KONG (AP) Stock markets turned lower in European trading on Wednesday after major banks were fined for manipulating markets. Earlier, however, Chinese stocks jumped and Tokyo's Nikkei index touched a seven-year high.
KEEPING SCORE: Britain's FTSE 100 dropped 0.5 percent to 6,595.51 and France's CAC 40 dropped 1.3 percent to 4,187.70. Germany's DAX lost 1.5 percent to 9,225.02. U.S. stocks were set to open lower, with Dow and S&P 500 futures both down 0.5 percent.
BANKS: Financial stocks were under pressure after five major banks were fined a total of $3.4 billion by regulators in the U.S., Britain and Switzerland for allegedly manipulating foreign exchange markets. Those hit were Citibank, JPMorgan Chase Bank, Royal Bank of Scotland, HSBC Bank and UBS. The investigation is not over, however, with Barclays among the banks that have yet to settle on a fine.
ASIAN DAY: Sentiment was more upbeat earlier. China's Shanghai Composite Index surged 1 percent to 2,494.48 after Hong Kong scrapped a daily limit on how much yuan residents can buy. Japan's benchmark Nikkei 225 closed 0.5 percent higher at 17,197.05 after rising as much as 1.4 percent. Markets fell in Australia and Taiwan, but rose in South Korea and India.
YUAN LIMIT: The Hong Kong Monetary Authority announced it was ending the 20,000 Hong Kong dollar ($2,580) daily limit on yuan purchases by local residents. That added to investor anticipation ahead of next week's launch of the Shanghai-Hong Hong stock trading link, which promises to give local and foreign investors a bigger foothold in China's tightly controlled stock markets.
ELECTION TALK: Elsewhere in Asia, investors again latched on to speculation that Japan's Prime Minister Shinzo Abe may call a snap election instead of going ahead with a planned second hike in consumption tax. Such a move would take pressure off Asia's second biggest economy in the short term. It has suffered after the government raised the consumption tax in April to help stabilize tattered public finances.
THE QUOTE: "Japanese equities have proved to be the gift that keeps on giving after recent gains," said Stan Shamu, strategist at IG Markets in Melbourne.
CURRENCIES: The dollar slipped to 115.16 yen from 115.72 in late trading Thursday. The euro rose to $1.2477 from $1.2466.
ENERGY: Benchmark U.S. crude oil slipped 73 cents to $77.21 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 54 cents to close at $77.94 a barrel on Tuesday.