Europe, Asia Close Lower

European and Asian stock markets closed lower on Wednesday on soaring oil prices and a weaker U.S. dollar

European stock markets were lower on Wednesday. In London, the Financial Times Stock Exchange 100 lost 44.35 points, or 0.88%, to close at 4988.50. The FTSE lost the key 5000 mark, hit by soaring oil prices and a weaker US dollar. A combination of mixed earnings results and companies trading ex-dividend added to the pain. A positive opening on Wall Street helped marginally. US January CPI came in at 0.1%, suggesting inflation is not a significant issue at present. In London, Barclays, Standard Chartered, and Scottish & Southern were all out of favour after trading ex-dividend today. In the retail sector, Dixons and Marks & Spencer fell after receiving broker downgrades. Cadbury Schweppes erased early gains after reporting fiscal 2004 underlying profits of 933 million pounds, with earnings per share slightly ahead of expectations at 32.6 pence.

In Germany, the DAX lost 12.55 points, or 0.29%, to close at 4310.66. The German Ifo February business climate index came in at 95.5 (96.7 estimated) from 96.4 in January. On the corporate news front, auto stocks declined after the VDIK association of vehicle importers reported new car registrations fell 2% in February from a year earlier. VW paced peers as Peugeot's outlook disappointed. Steel stocks ThyssenKrupp and Salzgitter fell after Rio Tinto said it plans to increase the price of iron ore, matching the increases announced by rival Cia Vale do Rio Doce yesterday. Deutsche Boerse paced Dax stocks higher after speculation mounted its key shareholders may force a vote on its LSE bid.

France's CAC-40 lost 25.14, or 0.63%, to close at 3977.19. Paris closed the session lower as US markets trade mostly higher near the noon hour, bouncing back from yesterday's falls. However, overall sentiment remains weak, due to the high oil prices and a weak U.S. dollar, both factors raising fears about inflation. Germany's Ifo business climate index came in weaker than expected. In Paris, the fall in the dollar kept French exporters in check, with carmakers also eyed as PSA disclosed its latest earnings figures. Shares in the manufacturer of Peugeot and Citroen cars fell further as the group said margins will stay at around current levels, which analysts felt was a disappointment given new model launches late last year. On the M&A front, Accor said it has no plans to bid for all of Club Med. France Telecom turned higher after this morning confirming that an arbitration panel ordered the Lebanese government to pay $266 million to its 66.7%-owned wireless operator FTM Liban for scrapping a contract. Alcatel added to yesterday's gains on the back of a TV deal with Microsoft.

Asian markets were lower on Wednesday. In Japan, the Nikkei 225 lost 97.53 points, or 0.84%, to close at 11,500.18. Japan's Nikkei 225 index eased part of its early losses, dragged down by concerns over rising commodity prices. Haseko fell further after the firm issued a warning on big losses and revealed its plan to raise $664 million through preferred stock allocation to three investment banks. Major exporters such as Canon lost as the yen strengthened against the dollar.

In Hong Kong, shares plunged. At close, the Hang Seng Index slid, 132.58 points, almost 1%, to 13,951.59, breaching the 14,000 support level. Property plays fell despite the strong biddings at the government land auction yesterday. Sino Land continued to drop (-2.9%) after it won the Kowloon Bay commercial site for $1.82 billion (hong kong), tripling the starting price. The property sub-index fell 1.1% for the day. On the upside, Esprit went up before the release of its interim results.

Canada's benchmark TSX/S&P gained 35.22 points, or 0.36%, to close at 9,675.69.

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