Europe Rises, Asia Falls After Pessimistic 'Tankan' Survey

TOKYO (AP) -- European shares edged higher after Asian benchmarks finished lower Friday, as a quarterly report by Japan's central bank rekindled worries about the world's third largest economy.

Shares were slightly higher in Europe in early trading, after finishing lower in Asia, declining in Tokyo, Seoul, Sydney and Shanghai. Markets were closed in Hong Kong for a holiday. Oil prices fluctuated throughout the day.

In Paris, the CAC 40 gained 0.4% to 5,946.61, while Germany's DAX edged up 0.3% to 12,820.65. Britain's FTSE 100 added 0.2% to 7,180.70. The future for the Dow industrials slipped 0.4% to 30,664.00. The S&P 500 future fell 0.3% to 3,777.00.

Recent data suggest global growth is slowing as countries grapple with renewed waves of coronavirus outbreaks, soaring prices and the war in Ukraine.

In the Bank of Japan "tankan" survey, the headline index for large manufacturers was 9, down from 14 in the previous quarter and the second straight quarter of declines. The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

The numbers for non-manufacturing indicators were better, but worries are growing because of pressures from a weakening Japanese yen.

The tankan results might spur criticism over the Bank of Japan's ultra-loose monetary policy, which is a factor behind the weaker yen, said Stephen Innes, managing partner at SPI Asset Management.

"The bank may wait until the Q3 survey is released before stepping away from its ultra-dovish setting," he said in a report.

In a bit of positive news, a survey by a Chinese business magazine, Caixin, found China's factory activity expanded in June at its strongest rate in 13 months following an easing of anti-virus restrictions that shut down Shanghai and other industrial centers..

A monthly purchasing managers' index issued by Caixin rose to 51.7 from 48.1 in May on a 100-point scale on which numbers above 50 show activity increasing. New orders rose while employment declined for a third month.

Japan's benchmark Nikkei 225 dropped 1.7% to finish at 25,935.62. Australia's S&P/ASX 200 edged down 0.4% to 6,539.90. South Korea's Kospi lost 1.2% to 2,305.42. The Shanghai Composite fell 0.3% to 3,387.64.

Hong Kong's markets were closed for a holiday.

Rising inflation is behind much of the slump for the broader market this year as businesses raise prices, squeezing consumers.

The Federal Reserve and other central banks have been aggressively raising interest rates to try and slow economic growth to cool inflation. Higher rates risk a recession if they slow economies too much. They also hurt prices for stocks, bonds, cryptocurrencies and other investments.

A measure of inflation that is closely tracked by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April. The report from the Commerce Department also said consumer spending rose at a sluggish 0.2% rate from April to May.

The update follows a worrisome report earlier this week that consumer confidence had slipped to its lowest level in 16 months. The government also reported that the U.S. economy shrank 1.6% in the first quarter. Weak consumer spending was a key part of that contraction.

The OPEC oil cartel and allied producing nations decided Thursday to increase production of crude oil, but the amount will likely do little to relieve high gasoline prices at the pump and energy-fueled inflation plaguing the global economy.

In energy trading, benchmark U.S. crude added $2 to $107.76 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose $2.22 to $111.25 a barrel.

In currency trading, the U.S. dollar inched down to 135.51 Japanese yen from 135.75 yen. The euro cost $1.0459, down from $1.0484.