LONDON – Stock markets mostly traded in narrow ranges Thursday as investors awaited to see if the world's leaders can thrash out a comprehensive agreement on the global economy in a two-day summit in the South Korean capital Seoul.
In Europe, the FTSE index of leading British shares was up less than a point at 5,817.12 while Germany's DAX rose 0.1 percent to 6,727.51. The CAC-40 in France was 9.61 points, or 0.3 percent, higher at 3,878.84.
U.S. shares were poised for a modest retreat at the open following minimal gains Wednesday — Dow futures were down 26 points, at 11,276 while the broader Standard & Poor's futures were down 4.6 points at 1,209.50.
The main point of interest in the markets is whether leaders from the Group of 20 industrial and developing countries can come up with more than platitudes at the conclusion of their meeting.
The leaders are set to discuss a number of key issues crucial for the future of the global economy and their meeting comes amid ongoing tensions in the currency markets, fears of a rising tide of protectionism and big divergences in trade positions.
"There may be a temptation amongst traders to start sitting on hands as they await some meaningful conclusions as to exactly how the largest economies can navigate themselves away from an impending global currency crisis," said Chris Weston, research analyst at IG Markets.
Expectations are fairly low that the leaders will come up with any significant agreement, especially on what many leaders consider to be the main source of tension in the foreign exchange markets — the Chinese monetary authorities' reluctance to allow their currency, the yuan, to appreciate faster against the dollar.
Because the yuan is kept artificially low against the dollar, the Chinese have managed to build up a massive trade surplus as the country's exporters gain what many consider to be an unfair advantage. The counterpart to that is that a large chunk of the U.S.'s near $500 billion annual trade deficit is with China.
Meanwhile, the Chinese are also voicing their concerns about the Federal Reserve's decision last week to pump another $600 billion into the U.S. economy, arguing that the move is an indirect attempt to weaken the dollar.
The irony though is that the dollar has returned to favor since the Fed's announcement, largely because the U.S. economic data have come in better than expected at a time when investors are getting fidgety about a tightening of policy in China to dampen down inflationary pressures — figures earlier showed that Chinese consumer price inflation rose to a 25-month high of 4.4 percent in the year to October.
"As the number one and two economic powers in the world today neither is expected to give ground," said Howard Wheeldon, senior strategist at BGC Partners.
Meanwhile, Europe's leaders, at least those that represent countries that use the euro, are likely to have one eye on what's going on in the government debt markets amid mounting concerns that Ireland will be forced to look for a financial bailout from its partners in the eurozone as the government struggles to get a grip on its parlous public finances.
Interest rates on 10-year Irish government bonds are seemingly hitting new decade highs on a daily basis and stand a massive 5 percentage points higher than where they started the year at.
Though Ireland does not have any impending need to raise cash, the worry is that it just won't be feasible for it to tap the markets when it has to if the market rates remain at their current level.
Tensions are also on the up in Portugal after the government had to pay a higher interest rate to get investors to buy into an auction Wednesday.
All this is bad news for the euro, which continues to drop from last week's multi-month high of $1.4281.
By mid morning London time, the euro was down 0.3 percent at $1.3740. That's over five cents lower than last
Though the fallback from recent highs will likely be welcomed by politicians across the eurozone, officials at the European Central Bank and hard-pressed exporters, there'll be worries that the selling may turn disorderly.
Daragh Maher, a currency strategist at Credit Agricole, said the mood in the markets is "fickle" and there will be a temptation among investors to "jump on this growing enthusiasm for euro disdain."
However, he said "caution is required" but that the coming days will be critical for expectations of where the euro will end the year.
"The difficulty is that this market is moving on sentiment rather than data," said Maher.
The Japanese yen has also been falling against the dollar in recent session, to the likely relief of the country's big exporters. That boost to sentiment helped the Nikkei 225 stock average close up 30.94 points, or 0.3 percent, to 9,861.46.
By mid morning London time, the dollar was flat at 82.28 yen.
Elsewhere in Asia, Hong Kong's Hang Seng added 0.8 percent 24,700.30 while Australia's S&P/ASX 200 rose 0.6 percent to 4,728.60.
Chinese shares closed mixed even after credit ratings agency Moody's Investors Services upgraded its view on China.
The benchmark Shanghai Composite Index rising 1 percent, to end at 3,147.74. The Shenzhen Composite Index for China's smaller, second exchange fell 0.6 percent to 1,381.49.
Benchmark oil for December delivery was up 49 cents at $88.30 a barrel in electronic trading on the New York Mercantile Exchange.
Associated Press Writer Pamela Sampson in Bangkok contributed to this report.
(This version CORRECTS Corrects contributor line. Adds analysts' comments. Changes byline, dateline. This story is part of AP's general news and financial services.)