Europe Stocks Mixed, Japan's Nikkei Rises on Yen

By Jamey Keaten

PARIS -- After starting the day in negative territory, Europe's main indexes were mixed around midday as investors cautiously contemplated a further fall in value for the Japanese yen -- which sent the benchmark Nikkei index surging more than 2%.

Analysts predicted a subdued start to Europe's trading week with voters in Italy and Cyprus to cast ballots next weekend and Wall Street's closure for Presidents Day. Traders also had to digest news from the weekend meeting of Group of 20 finance ministers, which avoided upbraiding the government of Japanese Prime Minister Shinzo Abe for introducing measures that would have the knock-on effect of driving down the yen in a bid to help manufacturers.

After starting the day in negative territory, Europe's main indexes were mixed around midday. Britain's FTSE 100 fell 0.2% to 6,318.65. Germany's DAX climbed 0.2% at 7,605. France's CAC-40 lost 0.2% to 3,653.

U.S. stock markets are closed for the Presidents Day holiday.

Germany's central bank announced Monday that Europe's biggest economy was on track to avoid a recession as it shows signs of growth in the first three months of the year, reporting greater business optimism and easing fears of the euro-zone debt crisis.

The German economy shrank 0.6% in the fourth quarter of 2012. The European Central Bank predicts the euro zone economy will shrink 0.3% in 2013 and only start to recover later this year. Growth is seen as pivotal to resolving the debt crisis by shrinking national debts relative to their economy and boosting tax revenue.

German industrial stocks were among the biggest risers on Monday, with automaker Daimler, Deutsche Telekom, and chemicals powerhouse BASF all rising about 1%. In France, Natixis shares soared more than 26% to 3.58 euros after the financial services firm announced a restructuring and plans for a one-time 2 billion euro, or 65 euro cents a share, distribution to shareholders this year.

Earlier, many eyes in Asia were on Japan, where the Nikkei 225 index in Tokyo surged 2.1% to close at 11,407.87. Australia's S&P/ASX 200 rose 0.6% to 5,063.40. South Korea's Kospi was marginally higher at 1,981.91.

A lack of G20 criticism for Abe's economic policy appeared to give him a freer hand to pursue Japan's efforts to jolt its manufacturing sector.

"The lack of specificity will mean that the G20 statement will allow further unobstructed" yen weakness in the months ahead, Mitul Kotecha of Credit Agricole CIB said in a market commentary.

The dollar gained against the yen, after retreating earlier, trading up 0.44% to 93.22 yen. The euro was up 0.34% to 129.39 yen, and was unchanged against the dollar at $1.34.

Mainland Chinese shares were mixed after a weeklong break for Lunar New Year. The Shanghai Composite Index fell 0.5% to 2,421.56. Hong Kong's Hang Seng fell 0.3% to 23,381.94.

"Today there is some softening but not large selling pressure," said Linus Yip, strategist at First Shanghai Securities in Hong Kong. "The U.S. stock market will be closed, so maybe market sentiment may be a little more cautious."

Last week, the yen fell to a near three-year low against the dollar and the euro. The yen has been steadily declining since December because of expectations that Japan's central bank would take action resulting in a weakening of the yen.

Since the start of the financial crisis, central banks around the world have been trying to stimulate their economies by keeping interest rates extremely low to encourage consumers and businesses to borrow and spend. One way central banks drive down rates is to use their power to print money to buy up large quantities of bonds.

Several developing economies have recently criticized the U.S. program of quantitative easing for pushing up the value of their currencies. By buying up bonds, the U.S. Federal Reserve has also increased the amount of money in circulation. This has had the side-effect of driving down the value of the U.S. dollar relative to others.

Benchmark oil for March delivery was down 23 cents to $95.62 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed at $95.86 a barrel on the Nymex on Friday.

AP Business Writer Pamela Sampson contributed from Bangkok
Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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