World markets mostly lower on dour US data

World stocks ended mostly lower Thursday after worse-than-expected U.S. unemployment and housing data cut off an earlier rebound that saw investors buying up beaten-down bank stocks.

• An announcement by Microsoft Corp. that it is cutting 5,000 jobs over the next 18 months _ a sign of how badly even the biggest and richest companies are being stung by the recession _ also weighed on sentiment.
• The Dow Jones industrial average fell 105.30 points, or 1.28 percent, to 8,122.80.
• Broader market indexes recovered some of their losses but still showed big drops. The Standard & Poor’s 500 index fell 12.74, or 1.52 percent, to 827.50. The technology-heavy Nasdaq composite index dropped 41.58, or 2.76 percent, to 1,465.49 after the Microsoft news.
• In Europe, Britain’s FTSE 100 benchmark index closed down 0.19 percent at 4,052.23. Germany’s DAX ended the day down 0.98 percent at 4,219.42, and France’s CAC 40 fell 1.24 percent to 2,869.62. In the morning, all three had risen at least 2.0 percent higher.
• European markets had followed Asian stocks higher as bank shares _ battered this week on fears of deep losses and possible collapses _ rebounded with the help of investors looking for bargains.
• The earlier rally in Europe and Asia _ where Japan’s Nikkei 225 gained 1.9 percent to 8,051.74 and Hong Kong’s Hang Seng closed up 0.6 percent at 12,657.99 _ was largely due to a bounce in financial stocks.
• But banking shares remained largely volatile throughout the day, with Royal Bank of Scotland _ which lost over a half of its share value in a week after it said it expected the largest loss in British corporate history _ up more than 20 percent at one point. Its shares closed down 2.4 percent at 12.20 pence ($0.17).
• The buying was fueled in part by hopes that President Barack Obama’s government will quickly enact a financial rescue plan. Treasury Secretary-designate Timothy Geithner told lawmakers that passing the stimulus plan was essential.
• “There’s the inevitable chatter that part of the upside could be attributed to the Obama effect as confidence rises that the new administration will have a more effective plan to turn around the economic crisis,” said Matt Buckland, a dealer at CMC Markets.
• He noted, however, that Wall Street has yet to make up for the rout it suffered on Inauguration Day, as sentiment remains fragile.
• U.S. data on jobs and housing were worse that expected. The Labor Department said the number of first-time jobless benefit claims jumped to a seasonally adjusted 589,000 in the week ended Jan. 17 from a revised 527,000 the previous week. Economists polled by Thomson Reuters, on average, forecast claims would increase to 540,000.
• “Unemployment numbers are bad, and might get a little worse,” said Roy Williams, chief executive of Prestige Wealth Management Group. “Everyone is in a defensive mode right now.”
• Data from the Commerce Department showed the housing market continued to weaken in December. Construction of new homes and apartments plunged to an all-time low annual rate of 550,000 units last month. The December number was 15.5 percent below November’s figure, which had been the weakest on record.
• Such news echoed bleak data from the rest of the world.
• Germany on Wednesday said economic growth this year could easily shrink by the most since World War II, and many governments were forced to announce a new round of bank rescue measures.
• China’s economic slump deepened in the fourth quarter, with growth sliding to a seven-year low of 6.8 percent from 9 percent the previous quarter. For the full year, China’s economy expanded by 9 percent _ its slowest yearly growth since 2001.
• In Japan, exports plunged at a record pace of 35 percent in December, marking a third straight month of decline, the government reported.
• The data, worse than many expectations, together highlighted the damage being inflicted on Asia as demand for cars, electronics, clothes and other goods evaporates in the U.S. and Europe.
• “Clearly our region is really plunging into a steep recession,” said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong. “We are going through a big slowdown.”
• Asian governments have been scrambling to prop up their economies, slashing interest rates and rolling out massive spending plans. Japan’s central bank, while Thursday holding its key interest rate at 0.1 percent, said it would “examine” outright purchases of corporate bonds in the future to help capital-starved companies.
• In Latin America, stocks fell in the wake of the worse-than-expected U.S. economic data in the U.S., despite a big interest-rate cut in Brazil.
• Brazil’s Ibovespa stock index fell 1.7 percent to 37,894. Analysts said Thursday’s declines in Brazil were largely because the market had already priced in a rate cut. Brazil’s central bank on Wednesday cut the benchmark Selic rate to 12.75 percent, a 1 percent drop. The market had anticipated a 0.75 percent drop.
• Mexico’s IPC index dropped 1 percent to 19,307, Argentina’s Merval index fell 0.5 percent to 1,058. Chile’s IPSA index, however, rose rising 1 percent to 2,494.
• Oil prices rose in volatile trading after the government reported an enormous buildup of oil and gasoline at U.S. storage facilities, another manifestation of how badly the deteriorating economy has cut into energy demand. Prices tumbled 7 percent before a late day rally, with light, sweet crude for March delivery settling up 12 cents at $43.67 on the New York Mercantile Exchange.
• In currencies, the euro rose to $1.3021 in late afternoon trading Thursday from $1.2954 late Wednesday, while the British pound dropped to $1.3876 from $1.3922. The dollar slipped to 89.09 Japanese yen from 89.43 yen.