Mixed corporate earnings turn markets cautious

LONDON Global stocks were steady on Wednesday as corporate earnings reports sent mixed signals about the economy and trading in currency markets remained volatile.

Although U.S. earnings have been relatively upbeat this week, European reports were distinctly mixed, showing some companies are still in the midst of a deep restructuring of their business. Dutch insurer ING is slashing another 2,400 jobs while French bank Societe Generale booked a loss in the fourth quarter and said it will make savings cuts.

French car maker PSA Peugeot Citroen posted a record loss in 2012 but its shares rose 6 percent as it said it was now ready to benefit from a recovery in demand next year after painful job cuts.

By midday in Europe, Britain's FTSE 100 was flat at 6,333.76 while Germany's DAX was up 0.4 percent to 7,689.87. France's CAC-40 was also unchanged at 3,685.1.

Wall Street appeared headed for a higher open, with futures in both the Dow and the broader S&P 500 rising 0.1 percent. On Tuesday, the Dow closed at its highest level since late 2007, just 150 points off its record of 14,164.53.

Earlier in Asia, Japan's Nikkei index tumbled as the yen strengthened against the dollar following a pledge by finance ministers from the world's seven major advanced economies to refrain from intentionally weakening their currencies. The Nikkei 225 dropped 1 percent to close at 11,251.41.

The Group of Seven nations said in a statement that they remained committed to exchange rates driven by the market, meaning governments or central banks should not try to influence their value.

Traders interpreted the statement as a message directed at Japan, where the yen has plummeted against the dollar since Prime Minister Shinzo Abe took office and pushed the central bank for ultra-loose monetary policy. Central bank governor Masaaki Shirakawa, who has appeared at odds with Abe's views on monetary policy, is resigning next month, giving the government an opportunity to find a successor more sympathetic to its aims.

After falling sharply against the yen on Tuesday, the dollar stabilized on Wednesday, trading 0.1 percent higher at 93.62 yen. The euro, which like the yen rose against the dollar after the G-7 statement, gained another 0.3 percent to $1.3492.

Glenn Levine, senior economist at Moody's Analytics, said Japan's steps to boost its economy, including asset purchases by the Bank of Japan and raising the inflation target to 2 percent, offer promise but come with the risk of sparking a currency war.

He noted that the U.S. Federal Reserve and Bank of England have taken even more aggressive steps but have been "less vocal, and have thus avoided setting off currency alarms."

"Japanese Prime Minister Shinzo Abe merely vocalized what everyone already knew, that a cheaper currency is beneficial to growth," Levine said.

The Bank of Japan begins a two-day policy meeting Wednesday but analysts said no new initiatives were expected in light of the impending leadership change.

Elsewhere, Australian stocks closed at their highest level since September 2008. The S&P/ASX 200 gained 0.9 percent to 5,003.70 after the release of strong earnings from Commonwealth Bank of Australia and construction company Leighton Holdings.

South Korea's Kospi advanced 1.6 percent to 1,976.07. Benchmarks in Singapore, Indonesia and the Philippines also rose.

Markets in mainland China, Hong Kong, Taiwan and Vietnam were closed for Lunar New Year holidays.

In commodity markets, the benchmark crude oil contract for March delivery was up 24 cents to $97.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 48 cents to finish at $97.51 on the Nymex on Tuesday.