World markets down as rally runs out of steam

HONG KONG: Global stock markets retreated Monday, breaking several days of gains, as positive news of fewer job losses in the U.S. was blunted by investors moving to book recent profits.

Most Asian markets closed down, with white-hot Chinese and Hong Kong shares giving back all their gains from early in the session and then some. Crude oil prices and the dollar both slid.

The region's investors were emboldened early in the day by the latest dose of less dreary news: a key monthly job report showing the world's largest economy shed 539,000 jobs last month - the lowest in six months. The reading amounted to far fewer than forecast, feeding a popular theme of economic recovery that's driven world markets sharply higher since early March.

But many analysts say recent improvements in the economy may not justify the swift rise in equity prices of late. They say the rally is being fueled in part by hot money flowing from mutual funds and other big investors that could delay a major correction for weeks or months but isn't the stuff of lasting bull runs.

"The markets are becoming overbought. The fundamentals of the economy just don't support these levels so we're seeing some profit taking," said Peter Lai, investment manager at DBS Vickers in Hong Kong.

European markets opened lower with Britain's FTSE 100 down 1.1 percent, Germany's DAX off 1.4 percent and France's CAC-40 losing 1.5 percent. Wall Street looked to give back some of its gains after U.S. futures fell. Dow futures were down 94 points, or 1.1 percent, to 8,422, while S&P 500 futures were down 12.7 points, or 1.4 percent, to 912.

In Asia, Japan recouped losses to closed higher, with the Nikkei up 19.15 points, or 0.2 percent, to 9,451.98, as hopes for a global economic recovery eclipsed disappointment over a stream of poor corporate earnings. Weighing on the broader market were automakers after Toyota reported its worst-ever annual loss - and forecast an even bigger losses this year. Toyota shares fell 4.8 percent.

Chinese shares, meanwhile, snapped a six-session winning streak as the benchmark Shanghai Composite dropped 1.8 percent to 2,579.78.

That dragged on Hong Kong's Hang Seng, off 301.92 points, or 1.7 percent, to 17,087.95 after climbing nearly 2 percent early in the day.

Investors in greater China were watching for a chance to take profits after the recent rally, though prices initially rose after the government reported that China's main inflation barometer fell 1.5 percent in April from a year earlier, in line with expectations.

The data, along with reports that bank lending may have fallen from record levels, dashed hopes for another interest rate cut, analysts said.

Elsewhere, South Korea's Kospi gained 0.2 percent and Taiwan's benchmark rose 1 percent; Australia and India stock measures fell.

In New York Friday, investors consoled by the government's bank tests and the jobs report sent the Dow up 164.80 points, or 2 percent, to 8,574.65. The Standard & Poor's 500 index rose 21.84, or 2.4 percent, to 929.23, and the Nasdaq composite index rose 22.76, or 1.3 percent, to 1,739.00.

Oil prices were lower in Asia trade after charging higher last week, with benchmark crude for June delivery down $1.06 cents to $57.57. On Friday, the contract rose $1.92 to settle at $58.63 a barrel, the highest level this year.

In currencies, the dollar fell to 97.85 yen from 98.38 yen. The euro inched lower to $1.3601 from $1.3640.