World stocks muted amid fears of accelerated reduction in Fed stimulus

BEIJING, China – World stock markets were muted Thursday amid concern an improved U.S. economy might prompt the Federal Reserve to reduce its stimulus faster than previously expected.

Crude rose as expectations of greater heating oil demand in chilly North America offset signs of weak gasoline demand.

A survey Wednesday that showed U.S. employment increased in December prompted concern the Fed might accelerate the process of winding down bond buying that has supported stock prices. The Fed has been buying $85 billion of bonds a month in a strategy dubbed quantitative easing, or QE, but said in December it will trim that by $10 billion to $75 billion beginning this month.

“The bet is on QE wind-down sooner rather than later,” said Mizuho Bank in a report.

In Europe, France’s CAC 40 gained 0.1 to 4,264.02 while Germany’s DAX dropped 0.1 per cent to 9,491.49. Britain’s FTSE 100 was steady at 6,720.99.

Tokyo’s Nikkei 225 shed 1.5 per cent to 15,880.3 and China’s benchmark Shanghai Composite Index fell 0.8 per cent to 2,027.62. Hong Kong’s Hang Seng dropped 0.9 per cent to 22,787.33.

Elsewhere in Asia, Taiwan’s Taiex was down 0.5 per cent and Seoul’s Kospi fell 0.7 per cent. Sydney’s S&P/ASX 200 added 0.2 per cent to 5,324.40.

In the United States, payroll processor ADP said companies added 238,000 jobs in the U.S. in December, up slightly from 229,000 in the previous month. November’s figures were also revised higher. Official jobs data are due to be released Friday.

Futures augured lacklustre trading on Wall Street. Dow and S&P 500 futures were both down 0.1 per cent.

In currency markets, the euro rose to $1.3610 from $1.3577 late Wednesday. The dollar rose to 104.87 yen from 104.77 yen.

Benchmark U.S. oil for February delivery was up 36 cents at $92.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.34 to $92.33 on Wednesday.