Global markets struggled despite strong US data

LONDON (AP) — Global stock markets retreated on Monday despite another strong U.S. economic report showing the service sector grew sharply last month.

The Institute for Supply Management’s index of service-sector growth rose to 56.0 points from 52.2 in June, the highest reading since February and above market expectations. Any reading over 50 indicates expansion and the higher the number, the strong the growth.

The findings echoed big gains in a separate survey of the manufacturing sector and offset concerns about a weak jobs report last week.

But with U.S. indexes near record highs, investors were reluctant to buy into stocks any more at a time when the Federal Reserve is getting ready to rein in its monetary stimulus plan.

Economists expect the Fed to start cutting back in September or October on its monthly purchases of $85 billion in bonds. The Fed has been pumping money into the U.S. economy for more than four years in an effort to keep interest rates down and help boost lending. The program has been a boon to stocks, where investors have fled in search of higher returns.

By in Europe, Britain’s FTSE 100 closed down 0.43 percent at 6,619.58 while Germany’s DAX shed 0.1 to 8,398.38. France’s CAC-40, however, was up slightly, 0.1 percent, at 4,049.97.

European stocks had traded higher earlier, supported by surveys of the eurozone and U.K. services sectors. The final estimates of the so-called purchasing managers’ indexes were upbeat, particularly for Britain, which saw a sharper-than-expected increase.

But the mood was weighed down by a weak opening on Wall Street. The Dow Jones industrial traded 0.36 percent lower at 15,601.72 while the S&P 500 shed 0.19 percent to 1,706.43.

Earlier in Asia, stock indexes were mixed.

Japan’s Nikkei 225 index fell 1.4 percent to close at 14,258.04 as the dollar hovered below 100 yen. A stronger yen makes Japanese products more expensive overseas and can hurt companies whose survival hinges on exports.

Australia’s S&P/ASX 200 fell 0.1 percent to 5,111.30 as traders waited for the Reserve Bank of Australia’s monthly interest rate decision on Tuesday and the release of employment figures for July on Thursday. South Korea’s Kospi fell 0.4 percent to 1,916.22.

Hong Kong’s Hang Seng advanced 0.1 percent to 22,222.01. Benchmarks in mainland China, Taiwan and New Zealand rose. Singapore and the Philippines fell.

The dollar weakened, a sign that some investors are betting the Fed may keep its monetary stimulus program at the current level for a little longer than expected. The stimulus lowers market interest rates, reducing the appeal of some dollar-denominated investments, such as Treasurys. That in turn weakens appetite for the dollar.

The dollar fell 0.3 percent against the Japanese yen, to 98.54 yen, though the euro was down 0.12 percent to $1.3257.

Benchmark crude for September delivery was down 10 cents to $106.84 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 95 cents on Friday.


Pamela Sampson in Bangkok contributed to this report.

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