Chinese stocks drop, other global markets mixed
BEIJING - Chinese stocks fell Tuesday despite government intervention and other global markets were mixed as Greece's spiraling crisis kept investors on edge.
In early trading, Germany's DAX added 0.3 percent to 10,922.82 and France's CAC-40 gained 0.2 percent to 4,719.36. Britain's FTSE 100 shed 0.2 percent to 6.521.87. On Monday, the DAX lost 1.5 percent, the CAC-40 declined 2 percent and Britain's FTSE 100 was off 0.8 percent.
Wall Street looked set for a rebound. Futures for the Dow Jones industrial average and the Standard & Poor's 500 were both up 0.2 percent. On Monday, the S&P declined 0.4 percent and the Dow and the Nasdaq composite lost 0.3 percent.
Chinese shares have fallen nearly 30 percent after hitting a peak June 2. Most Chinese indices still are up about 80 percent after starting an explosive rise late last year. New emergency measures announced last weekend included buying by brokerages and more credit from the central bank to finance trading. That helped to push up shares in big state companies such as banks and oil producers by up to 10 percent on Tuesday but smaller companies declined. The Shenzhen Composite Index for China's second exchange, which has a bigger proportion of small companies than Shanghai, fell 5.8 percent. Analysts say artificial measures cannot keep prices up without improved fundamentals at a time when economic growth is near a two-decade low.
"China's leadership has doubled down on its efforts to prop up equity prices because it believes that its own credibility is now coupled to continued gains on the markets," said Mark Williams of Capital Economics in a report. "It is following a risky path. Our view remains that a market rally cannot run ahead of economic fundamentals indefinitely," he said. "There is a good chance that the market rescue efforts are seen to be a failure in a few months' time."
The Shanghai Composite Index fell 1.3 percent to 3,727.12 and Hong Kong's Hang Seng declined 1 percent to 24,975.31. Tokyo's Nikkei 225 advanced 1.3 percent to 20,376.59 and Sydney's S&P/ASX 200 added 1.9 percent to 5,581.40. Seoul's Kospi lost 0.7 percent to 2,040.29 and Taipei, Manila and Jakarta also declined. India's Sensex advanced 0.2 percent to 28,277.91.
Hopes for more talks between Greece and its creditors rose after Greek Minister Yanis Varoufakis quit, which analysts saw as a possible peace overture from Athens. But little time is left and Greek banks are running short of cash. In a referendum Sunday, a higher-than-expected 61 percent of Greeks voted "no" on demands for spending cuts and tax hikes in exchange for more bailout money. Many in the markets fear that the Greek vote has pushed the country one step closer to leaving the euro. The European Central Bank has been providing emergency credit to the banks, but on Monday said it could not increase the amount offered because the banks' collateral was weaker now.
Benchmark U.S. crude rose 45 cents to $52.98 per barrel in electronic trading on the New York Mercantile Exchange. On Monday, the contract plummeted $4.40 to $52.53 on concern about a possible European slowdown triggered by the Greek crisis. Brent crude, used to price international oils, rose 55 cents to $57.08 in London. It dropped $3.78 in the previous session to $56.54.
The dollar rose to 122.75 yen from 122.64 yen in the previous trading session. The euro declined to $1.0985 from $1.1056.