BANGKOK – A plunge in commodities and an unexpected rise in U.S. unemployment claims rattled nerves across world markets Friday ahead of a key jobs report, sending most benchmarks lower.
Oil prices sank below $96 a barrel, extending a sharp drop from the previous session. In currencies, the dollar rose against the yen after hitting a seven-week low. The greenback also strengthened against the euro.
Britain's FTSE 100 dropped 0.6 percent in early trading to 5,885.84. Germany's DAX gained 0.1 percent to 7,3867.48, and the CAC-40 in Paris rose marginally to 4,006.77. Wall Street appeared headed up — with Dow Jones industrial futures rising 13 points to 12,583 and S&P 500 futures up less than 2 points up at 1,337.
Japan's Nikkei 225 index slid 1.5 percent to close at 9,859.20. The yen's recent rise against the greenback threatens to inflict more pain on the country's export sector, which has struggled with destroyed factories, severe parts shortages and power outages since a devastating earthquake and tsunami on March 11. Honda Motor Co. Ltd. tumbled 4.7 percent, and Canon Inc. and Sony Corp. lost 2.3 percent.
The dollar fell as low as 79.54 yen Thursday, sparking expectations of another intervention in currency markets by Japan. The dollar hasn't traded below 80 yen since March 18, when the world's richest nations intervened to weaken Japan's currency and soften the economic blow dealt by the earthquake.
Elsewhere, South Korea's Kospi index dropped 1.5 percent to 2,147.45 and Hong Kong's Hang Seng index shed 0.4 percent to 23,159.14. Australia's S&P/ASX 200 was 0.2 percent down, with mining shares dragging on the index. BHP Billiton, the world's largest mining company, was off 1.9 percent, as was its rival, Rio Tinto Ltd.
Mainland Chinese shares were mixed as investors fretted over the economic outlook. The Shanghai Composite Index lost 0.3 percent to 2,863.89, while the smaller Shenzhen Composite Index gained 0.4 percent to 1,195.31. Shares in power companies led the gains while commodity shares weakened.
"Power companies rose due to speculation the authorities may raise electricity fees to combat power shortages," said Yang Yining, an analyst at Capital-edge Investment & Management Co. Ltd. in Shanghai.
Huaneng Power International, one of the biggest electricity generators, gained 2.9 percent, while China Yangtze Power Co. added 2 percent.
But PetroChina, the country's biggest oil and gas company and the Shanghai benchmark's biggest component, lost 2.2 percent as crude oil prices dipped.
On Thursday in New York, commodities fall sharply, indicating that some speculators were locking in their gains and that other investors were protecting profits because of concerns that Friday's monthly U.S. jobs report may be worse than expected. A FactSet survey of analysts forecasts that employers added 185,000 jobs in April.
Analysts said all was not grim despite the slumping markets: dropping commodities prices might ease the pressure on central banks to take action, such as raising interest rates to slow down the pace of lending and spending to battle inflation.
"It takes pressure off central banks around the world," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "The market view is if they get relief from high commodity prices, that's a positive thing."
Benchmark crude for June delivery was down $3.86 at $95.94 a barrel in electronic trading on the New York Mercantile Exchange. The day before, oil plunged $9.44 to settle at $99.80 a barrel as mounting concerns about the U.S. economy triggered the biggest one-day percentage decline in more than two years.
The drop in oil prices was a boost to airline companies: shares of Hong Kong-listed China Southern Airlines Co. Ltd. soared 7.1 percent, while Taiwan's EVA Airways Corp. jumped 5.5 percent and Qantas Airways Ltd. rose 3.4 percent.
On Wall Street, stock indexes fell after the Labor Department said that first-time claims for unemployment benefits rose to 474,000 last week, the highest level in eight months. Forecasters didn't see it coming. Economists had expected claims would drop to 410,000.
The Dow Jones industrial average lost 1.1 percent to 12,584.17. The S&P 500 dropped 0.9 percent to 1,335.10. The Nasdaq composite fell 0.5 percent to 2,814.72.
Applications for unemployment benefits have increased in three of the previous four weeks. The jump in claims, along with other signs the U.S. economic recovery is losing strength, have raised concerns about what the government's monthly jobs report for April will reveal when it is released Friday.
In currencies, the euro fell to $1.4520 from $1.4530 late Thursday in New York. The greenback strengthened to 80.39 yen from 80.19 yen.
Researcher Fu Ting contributed from Shanghai.