World shares retreat, Japan higher

TOKYO (AP) — World markets were mostly lower Friday though Japan’s benchmark jumped as it caught up after a holiday.

Shares fell in Paris, London, Shanghai and Hong Kong but climbed 2.1% in Tokyo. U.S. futures also declined.

Worries over troubled Chinese real estate developer Evergrande and the pandemic are weighing on sentiment, analysts said.

Some Chinese banks on Friday disclosed what they are owed by Evergrande, seeking to dispel fears of financial turmoil as it struggles under $310 billion in debt. Evergrande’s announcement that it was making a payment due Thursday helped to ease some worries.

France's CAC 40 slipped 0.9% in early trading to 6,641.43, while Germany's DAX shed 0.7% to 15,531.38. Britain's FTSE 100 edged down 0.3% to 7,059.54. U.S. shares were set to drift lower with the Dow future down 0.3% to 34,558.00. The S&P 500 future lost 0.3% to 4,423.25.

In Asian trading, Japan's benchmark Nikkei 225 gained 609 points to 30,248.81. South Korea's Kospi edged down nearly 0.1% to 3,125.24. Australia's S&P/ASX 200 slipped 0.4% to 7,342.60. Hong Kong's Hang Seng declined 1.3% to 24,192.16, while the Shanghai Composite lost 0.8% to 3,613.07.

Masayuki Tsunashima of Mizuho Bank warned risks remained for markets from the potential troubles at Evergrande. Prolonged coronavirus outbreaks also pose risks, he said.

“So, it cannot be ruled out that optimism remains fragile or, at the very least opportunistic as underlying risks have simply not been addressed, much less put to bed,” he said. “And this is consistent with markets remaining prone to volatility and negative shocks.”

Hong Kong-traded shares in China Evergrande New Energy Vehicle Group, its EV unit, dropped 22% and shares in China Evergrande Group lost 11.6% on Friday.

Investors were waiting to see if Evergrande will makes $83.5 million in payments on foreign denominated debt and also watching to see what, if anything, the Chinese government might do to forestall a wider impact from a possible default.

Traders had been feeling uneasy about how quickly the U.S. Federal Reserve might elect to rein in some of the support measures it’s been giving the markets and economy. Those worries were allayed by Wednesday, when the Federal Reserve signaled it wouldn’t begin considering such a tapering of support before at least November, and indicated it may start raising its benchmark interest rate sometime next year.

The Fed said it will likely begin slowing the pace of monthly bond purchases made throughout the pandemic to help keep borrowing costs low “soon” if the economy keeps improving.

In energy trading, benchmark U.S. crude oil rose 15 cents to $73.45 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.07 to $73.30 a barrel on Thursday.

Brent crude, the international standard, added 29 cents to $77.54 a barrel.

In currency trading, the U.S. dollar rose to 110.42 Japanese yen from 110.30 yen. The euro cost $1.1738, little changed from $1.1740.