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Tuesday January 12, 05:10 PM
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GLOBAL MARKETS - Equities weaker as earnings reports come in
By Jeremy Gaunt, European Investment Correspondent
LONDON (Reuters) - World stocks fell on Tuesday as investors digested early results from the U.S. and European earnings seasons while the dollar got a temporary boost from a view from China that its decline has hit bottom.
Market worries about Greece, reeling from a huge debt burden and downgrade, were on display with widening spreads while an otherwise successful T-bill auction commanded less buying interest and higher yields than previously.
MSCI's all country world stock index was down 0.2 percent and Europe's FTSEurofirst 300 lost 0.4 percent.
Earlier, however, Japan's Nikkei hit a new 15-month closing high, buoyed by China reporting record imports of some commodities and stronger-than-expected exports.
Earnings season was a key focus for many investors. U.S. aluminium producer Alcoa Inc, the first Dow Jones industrial average component to announce results, reported earnings below Wall Street estimates after the closing bell on Monday.
"Many are now worried that the early miss by Alcoa could be the theme of what is likely to be a fairly mixed and crucial earnings season," said James Hughes, market analyst at CMC Markets.
Underlining the potential for a mixed picture, the world's fourth largest retailer, Tesco, smashed Christmas sales growth forecasts in its main British market.
Investors have generally carried last year's risk rally through into 2010, given the continuing improvement in the global economy and the momentum from low interest rates and government stimulus plans.
BOTTOM DOLLAR?
The dollar initially gained on comments from Peng Junming, an official at China's $300 billion sovereign wealth fund CIC, that the currency had hit bottom and had limited room to fall further, while the yen would continue to weaken.
But it fell back later. The dollar was flat against a basket of currencies and the euro, but a third of a percent lower against the yen.
On debt markets, euro zone government bond prices were higher.
Greece successfully sold 1.6 billion euro in 6- and 12-month T-bills, but investor concern about its debt problems and worries about the euro zone's so-called peripheral economies was apparent.
The auction produced a yield of 2.20 percent for the 52-week paper, up from 0.91 percent in a previous Oct 13 auction and higher than dealers had expected. The bid-cover ratio was 3.05 versus 4.44, suggesting continuing, but weaker, demand.
Such auctions are usually dominated by domestic investors.
(Additional reporting by Simon Falush; editing by John Stonestreet)
(For more news on Reuters Money visit http://www.reutersmoney.in)
