BANGKOK ? World stock markets mostly sank Monday as investors warily eyed a possible rate hike by China's central bank and evidence that recoveries in the world's major economies are sputtering.
Oil prices hovered below $99 a barrel, extending losses from Friday after a report said Saudi Arabia plans to boost its crude production. In currencies, the dollar was stronger against the yen and the euro.
European shares were mixed in early trading. Britain's FTSE 100 rose 0.1 percent to 5,770.81, while Germany's DAX lost 0.2 percent to 7,058.84. France's CAC-40 was 0.1 percent lower at 3,800.50.
Wall Street was set to rise after a string of jarring sessions, with Dow Jones industrial futures up 18 points to 11,891 and S&P 500 futures less than 2 points higher to 1,265.30.
Nouriel Roubini, a New York University economics professor who became a quasi-celebrity for predicting the financial crisis, cautioned against risky investments.
"In the last month, things have changed, the evidence is that maybe this is not just a soft patch but something worse," he said in a speech in Singapore.
"If your horizon is the next two or three months, I would be a bit defensive on equities," he said. "This is time to be cautious, and safe rather than sorry."
Earlier in Asian trading, Japan's Nikkei 225 dropped 0.7 percent to close at 9,448.21 after the government reported that core machinery orders fell unexpectedly in April by 3.3 percent from the previous month.
The drop came as companies canceled orders following a devastating March 11 earthquake and tsunami in northeastern Japan that destroyed or damaged scores of factories.
The decline was the first in four months, evidence that the twin disasters continue to take their toll on Japan's economy. The seasonally adjusted figure includes heavily electrical machinery, engines, machine tools, road vehicles and aircraft but excludes orders for ships and utilities because of their volatility.
Toyota Motor Corp. dropped 2.4 percent after announcing Friday that it expected its annual profit to dive 31 percent, hammered by production disruptions from parts shortages.
South Korea's Kospi closed 0.1 percent higher at 2,048.74, reversing losses earlier in the day. Hong Kong's Hang Seng Index also finished higher after struggling for gains, closing 0.4 percent up at 22,508.08.
Linus Yip, a strategist at First Shanghai Securities in Hong Kong, said the possibility of another interest rate hike by China's central bank was the main drag on markets.
But he said shares in Hong Kong, which have been steadily down in seven prior sessions, were possibly oversold and due for a recovery.
"I think maybe they are oversold," he said. "I think there is a possibility for Hong Kong to hit a short-term bottom and actually rebound within a week."
But mainland Chinese shares edged lower as market players reacted to data showing a dip in bank lending and awaited inflation figures due out Tuesday that could show the consumer price index surging to more than 6 percent.
The Shanghai Composite Index fell 0.2 percent to 2,700.38 after dipping more than 1 percent earlier in the day. The Shenzhen Composite Index fell 0.2 percent to 1,110.89. Shares in non-ferrous metals, chemicals and information technology led the gains while food companies weakened.
"The economic data will not be favorable and there may be an interest rate hike this month. Also, trading volume is at a low level," said Peng Yunlang, an analyst based in Shanghai.
Aluminum Corporation of China Ltd., the country's biggest non-ferrous company, hit the daily limit of 10 percent, following recent news of its planned expansion of investments in rare earths assets.
Tsingtao Brewery Company Limited, one of the countries' main beer producers in China, lost 3.4 percent.
Benchmarks in Singapore, Indonesia, Taiwan and Thailand also sank.
Adding to the gloom is the recession in Japan that resulted from the earthquake. Among other woes, the disaster resulted in a scarcity of key parts that disrupted manufacturing around the globe.
In the U.S., the economy isn't growing as quickly as expected due in part to high prices. Since the market's peak on April 29, more than 15 economic indicators, ranging from the number of new jobs added in May to how much consumers are spending at retailers, have been weaker than analysts had predicted.
On Wall Street on Friday, fears that the global economic recovery has stalled pushed the Dow Jones industrial average below 12,000 for the first time since March and drove the stock market lower for the sixth straight week. The Dow fell 1.4 percent to close at 11,951.91. The S&P 500 index fell 1.4 percent to 1,270.98. The Nasdaq dropped 1.5 percent to 2,643.73.
Benchmark oil for July delivery was down 54 cents to $98.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2.64 to settle at $99.29 on the Nymex on Friday.
The euro was lower at $1.4329 from $1.4355 from late trading in New York. The dollar strengthened to 80.38 yen from 80.32 yen.
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Associated Press researcher Fu Ting contributed from Shanghai and AP Writer Alex Kennedy contributed from Singapore.
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