European stocks fall on weak US housing data

By COLLEEN BARRY AP Business Writer

MILAN (AP) - European markets fell Wednesday after U.S. data showed housing demand remains weak, possibly slowing the recovery in the world's largest economy.

A U.S. government report said construction of homes and apartments fell 10 percent in May, worse than economists were expecting.

In Europe, only Britain's FTSE 100 continued to hold on to gains, to trade barely 0.06 percent higher at 5220.72. Germany's DAX dropped 0.04 percent to 6172.3 and France's CAC-40 fell 0.22 percent to 3653.29.

Wall Street also struggled. A day after the Dow Jones industrials rose 214 points to the highest close in nearly a month, it fell 45 to 10,358. The Standard & Poor's 500 index was down 6 points at 1,109.

While some bullish manufacturing data out of the United States on Wednesday boosted Asian and European stocks in earlier trading, the housing figures dampened spirits.

Investors also saw risks for big oil companies' shares after President Barack Obama vowed to make BP pay for the devastating oil spill in the Gulf of Mexico.

Shares in BP PLC slipped 0.5 percent in London trading ahead of what promises to be a tense meeting between the oil company's chairman and Obama in Washington.

Spanish shares were down 1.3 percent after local daily El Economista reported that the International Monetary Fund and European Union were preparing a financial backstop for Spain. Finance ministry officials in Spain denied the report.

The euro edged down to $1.2291 from $1.2321.

In Asia, gains were broad-based and strong. Japan's Nikkei 225 stock average rose 179.26, or 1.8 percent, to 10,067.15, breaking above the key 10,000 level for the first time in almost a month.

Australia's ASX/S&P 200 advanced 1.2 percent to 4,559.00, the Kospi in South Korea gained 0.9 percent to 1,705.33 and Singapore's benchmark rose 1 percent to 2,846.05. Financial markets in Hong Kong, mainland China and Taiwan were closed for the last day of public holidays.

World markets have dropped along with the euro since May amid growing concerns that weaker European countries such as Greece would default on debt. Investors also were afraid that the budget cuts that countries such as Greece, Spain and Portugal have had to implement will slow their economic growth. The concern was that growth across the continent and the rest of the world would also be hurt.

The gains outside Europe suggest investors there have started to put aside some of their unease about Europe and focus on continuing signs of strength in Asia and the U.S.

In New York Tuesday, the Dow Jones industrials climbed 2.1 percent to 10,404.77 - its highest close since May 19 - after Boeing Co. said it was boosting production and an industry group forecast that demand for computers would increase.

The broader Standard & Poor's 500 index advanced 2.4 percent to 1,115.23, and the tech-dominated Nasdaq composite index surged 2.8 percent to 2,305.88.

In Tokyo trade, Japanese exporters benefited from a weaker yen against the euro. Canon Inc. jumped 3.9 percent and Sony Corp. added 1 percent.

Nintendo Co. surged 5.2 percent after the company unveiled a 3-D version of its popular handheld gaming device. In an effort to stay ahead of its rivals, Nintendo also announced Tuesday updates to classic game franchises like "Donkey Kong" and "Kirby" at the E3 Expo in Los Angeles.

Higher commodities prices sent resource names higher in Australia, with miner BHP Billiton Ltd. gaining 2.1 percent.

In currencies, the dollar rose to 91.68 yen from 91.52 yen in New York late Tuesday.

Benchmark crude for July delivery was down 20 cents at $76.73 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.82 to settle at $76.94 on Tuesday.