World stock markets retreated Thursday after the U.S. Federal Reserve struck a note of caution in its latest assessment of the world's No. 1 economy, according to AP. The central bank's statement, which accompanied a decision to leave interest rates at a record low, added to unease after weak housing figures suggested the U.S. economic recovery is uneven and vulnerable to turmoil in the markets. The Fed said that «financial conditions have become less supportive of economic growth.» The Fed cited what it called «developments abroad» but didn't mention by name debt-laden Europe, where shaky government finances have threatened to nip the continent's recovery from recession in the bud. Economic news in Asia was more upbeat _ with Japan reporting continued growth in exports for May, driven by demand from within the region _ but couldn't stop most markets reversing course after early gains. Oil prices, meanwhile, fell below $76 a barrel. The dollar was lower against the yen and gained versus the euro. «Investors are still paying close attention to the uncertainty in Europe, because that might hurt China's exports,» said Peng Yunliang, an analyst for Shanghai Securities. In early European trade, France's CAC-40 dropped 0.9 percent, Germany's DAX fell 0.7 percent and Britain's FTSE 100 shed 0.6 percent. Futures pointed to tentative gains on Wall Street. Japan's benchmark Nikkei 225 stock index edged up 4.64 points, or 0.1 percent, to 9,928.34 after exports rose for a sixth straight month as brisk global demand for cars and high-tech products helped shore up a recovery in the world's second-largest economy. South Korea's Kospi gained 0.8 percent to 1,739.87. Australia's S&P/ASX 200 retreated 0.1 percent to 4,479.70 amid news Australian Prime Minister Kevin Rudd had been dumped as leader by the ruling party and replaced with his deputy. Elsewhere, Hong Kong's Hang Seng fell 0.6 percent to 20,733.49 and the Shanghai Composite Index gave up 0.1 percent to 2,566.75. Stocks in India, Singapore, Malaysia, Thailand, the Philippines and New Zealand all fell. In New York overnight, the Dow Jones industrial average climbed just 4.92 points, or 0.1 percent, to 10,298.44 Wednesday. In currencies, the dollar fell to 89.62 yen from 89.93 in New York late Wednesday. The euro slid to $1.2286 from $1.2316. Benchmark crude for August delivery lost 43 cents to $75.92 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.50 to settle at $76.35 on Wednesday.
