Stock Markets Continue to Worry About Credit Downgrades

World stock markets have seen mixed trading as worries about credit downgrades of weaker Eurozone countries curbed risk appetite. In day trading, investors seemed to ignore the improved outlook on the US economy.

Recent US Government data showed inflation pressure waning, fanning expectations the Federal Reserve might do more to boost economic growth. The latest consumer price report followed data on Thursday suggesting a possible pick-up in job growth, which has been meagre during the current recovery.

US consumer prices were flat in November as Americans paid less for cars and gasoline, a further sign of a cool down in inflation that could give the Federal Reserve more room to help a still weak economy. Economists had expected an increase of 0.1 percent. Inflation spiked earlier in the year, but the report showed the trend has shifted. Over the past 12 months, prices have risen 3.4 percent. That marked a second monthly decline from a three-year high in September.

In other data affecting the finance markets, US first-time claims for jobless benefits fell to a 3-1/2-year low in the latest week, raising expectations that the weak labour market, which has bogged down US economic growth, might be gaining traction. Signs of strength in the manufacturing sector also boosted investors’ risk appetite.

There was also a sign of improvement in the European economy. A private gauge of euro zone manufacturing unexpectedly rose in December, although it remained at a level indicating a fourth straight month of contraction.

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