World markets fall ahead of EU summit

World stocks fell on Monday as investors grew cautious ahead of a critical European Union summit later this week where Greek leaders will attempt to renegotiate some terms of the country’s international bailout. Investor pessimism about the state of the world economy prevailed even as the leaders of France, Germany, Italy and Spain agreed over the weekend to push for a growth package worth up to (euro) 130 billion ($163 billion) at the European Union summit scheduled for June 28-29 in Brussels. The summit, aimed at kick-starting the economy and safeguarding the 17-nation euro currency bloc, will prove a key test of Greek leaders’ pledges to loosen the terms that the country agreed to in order to garner a huge financial aid package to stave off bankruptcy. Greece’s new government said on the weekend it would seek to repeal some taxes, halt layoffs and extend a deadline for tough austerity measures by two years. But Germany, the biggest single contributor to the bailout, says Athens must stick to the current targets. Previous summits and meetings have failed to deliver a solution to the crisis. “This week’s big event is undoubtedly the EU summit - yet another one. There have been many such events over the last two years, each of which has failed to deliver anything other than disappointment and confusion. There is absolutely no reason to expect this one to be any different,” Cameron Peacock of IG Markets in Melbourne said in a market commentary. European stocks fell in early trading. Britain’s FTSE 100 fell 0.5 percent to 5,487.56. Germany’s DAX lost 1.3 percent to 6,179.74 and France’s CAC-40 lost 1.2 percent to 3,054.09. Wall Street also appeared headed for a lower opening, with Dow Jones industrial futures down 0.6 percent to 12,495 and S&P 500 futures losing 0.7 percent to 1,317.70. Losses echoed those of Asia hours earlier. Japan’s Nikkei 225 index fell 0.7 percent to close at 8,734.62. South Korea’s Kospi slid 1.2 percent to 1,825.38 and Australia’s S&P/ASX 200 was down 0.5 percent at 4,027.80. Hong Kong’s Hang Seng gave up earlier gains to close 0.5 percent down at 18,897.45. Benchmarks in Singapore, Taiwan and Indonesia also fell while Malaysia, India and the Philippines rose. Mainland Chinese shares sank, with the benchmark Shanghai Composite Index down 1.6 percent to 2,224.11, the lowest close in five months. The Shenzhen Composite Index tumbled 2.5 percent to 919.39. Anhui Conch, the biggest cement producer in China, lost 5.1 percent and China Shenhua Energy Co. Ltd. lost 3.3 percent after news reports said inventories of coal hit a record at Qinghuangdao Port in northern Hebei Province. Rising inventories suggest weak demand and lower prices. Benchmark crude was down 48 cents to $79.30 in electronic trading on the New York Mercantile Exchange. The contract settled at $79.76 a barrel on Friday. In currencies, the euro slipped to $1.2503 from $1.2561 in late trading Friday. The dollar fell to 80.07 yen from 80.45 yen.