German data, US earnings lift world markets

LONDON -European and U.S. stocks reversed earlier gains Friday amid volatile trading as a number of investors began to shut up shop for the Christmas holiday by booking profits built up over the last nine months.

In Europe, the FTSE 100 index of leading British shares closed down 20.80 points, or 0.4 percent, at 5,196.81 while Germany's DAX fell 13.23 points, or 0.2 percent, at 5,831.21. The CAC-40 in France fell 36.38 points, or 1 percent, at 3,794.44.

On Wall Street, the Dow Jones industrial average was down 28.49 points, or 0.3 percent, at 10,279.77 around midday New York time while the broader Standard & Poor's 500 index fell 0.58 point, or 0.1 percent, to 1,095.50.

Markets in Europe and the U.S. had been trading higher earlier after encouraging German economic data and a batch of upbeat U.S. corporate earnings statements from software company Oracle Corp. and BlackBerry maker Research In Motion Ltd, but the upcoming Christmas and New Year holidays has prompted many investors to exit the stage, for this year at least.

Activity in markets is being affected by the upcoming year-end. Friday is the last day for many investors before they begin a two-week break and that could lead to volatile trading especially as many investors may be looking to book profits accumulated during the nine-month global stocks advance.

"It's worth bearing in mind the dire way in which equity markets were looking back in Q1 of 2009, how far the run higher has gone and the fact that any decision to book profits now is arguably looking rather prudent," said Chris Weston, institutional dealer at IG Markets.

Analysts said the fundamentals haven't changed and in fact may have improved Friday after the Ifo Institute in Germany revealed that business confidence in the eurozone's largest economy rose for the month running in December to stand at its highest level since July 2008.

Earlier, Asian markets fell as they responded to the previous session's falls on Wall Street and Europe, where sentiment had been knocked by mounting expectations that the U.S. Federal Reserve will start to withdraw its extraordinary liquidity measures sooner than anticipated and that interest rate increases may soon be on the agenda.

Japan's Nikkei 225 stock average fell 21.75, or 0.2 percent, to 10,142.05 while Hong Kong's Hang Seng shed 171.75, or 0.8 percent, to 21,175.88. South Korea's Kospi eased 0.1 percent to 1,647.04.

Australia's index dropped 0.4 percent and China's Shanghai market dived 2.1 percent on worries a stronger U.S. dollar and new stock listings will further drain liquidity.

Elsewhere, oil prices rose above $73 a barrel for a brief while on expectations the OPEC oil cartel will leave production unchanged at its meeting next week and Iranian troops crossed into Iraq and seized an oil field.

Benchmark crude for January delivery was up 20 cents at $72.85 in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract fell 1 cent to settle at $72.65.

In the currency markets, the dollar found renewed strength as stock markets turned lower. Like their counterparts in the stock markets, currency traders are booking profits made by the euro's sharp rise against the dollar.

The euro was down 0.4 percent at $1.4278, having earlier dipped to a new three and a half month low of $1.4262. As recently as late November, the euro was trading at $1.5145 and many currency watchers were anticipating further gains.

Mansoor Mohi-uddin, a currency strategist at UBS, expects the dollar to carry on rising further into the year-end as U.S investors either take profits or hedge their currency exposures.

—

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.