Chinese stocks led most markets lower Thursday after the country's central bank unexpectedly increased the interest rate on one of its treasury bills and indicated that it was looking to rein in bank lending. However, US stocks ended mostly higher Thursday as investors placed modest bets ahead of the government's monthly employment report. The gain in most stocks came as investors traded cautiously before Friday's report on December employment. Analysts are expecting modest job losses. The government reported a slight rise in weekly claims for unemployment benefits Thursday, though the increase was less than expected. The Labor Department said initial claims rose by 1,000 last week. The Dow Jones industrial average rose 33.18, or 0.3 percent, to 10,606.86. The broader Standard and Poor's 500 index rose 4.55, or 0.4 percent, to 1,141.69. It was the highest close for both indexes since Oct. 1, 2008. The Nasdaq composite index slipped 1.04, or 0.1 percent, to 2,300.05. Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.2 billion shares, compared with 1.1 billion Wednesday. In Europe, Germany's DAX index was down 22.74 points, or 0.4 percent, at 6,011.59 while France's CAC-40 was 5.1 points, or 0.1 percent, lower at 4,012.57. The FTSE 100 index of leading British shares was down just under 2 points at 5,528.11, unmoved by the widely-expected Bank of England decision to keep policy unchanged at its monthly meeting. Charles Dumas, an analyst at Lombard Street Research, said the People's Bank of China's decision to raise the interest rate on its three-month bills by 4 basis points to 1.36 percent would normally have gone unnoticed but that investors saw it as a hint that further tightening of monetary policy in the months ahead was likely in order to combat inflation. The Shanghai composite is now down 4.5 percent from its late-November peak, while other markets around the world have continued to post their highest levels in over a year. The key driver to stock market performance, at least in the first part of the year, will likely be whether economic figures back up the optimism that is evident in company valuations following a nine-month bull run. Stock markets around the world rallied strongly since March's lows - the Dow and the S and P 500 for example surged more than 60 percent since then - as investors grew more optimistic about the global economic recovery after central banks and governments pushed through extraordinary policy measures to mitigate the deepest recession since World War II. Earlier in Asia, Tokyo's Nikkei 225 stock average lost 49.79 points, or 0.5 percent, to 10,681.66 while Hong Kong's Hang Seng fell 147.22 points, or 0.7 percent, to 22,269.451. South Korea's SPI lost 1.3 percent to 1,683.45. Australia's index lost 0.5 percent and Taiwan's market was off 1.1 percent. Benchmark crude for February delivery was down 14 cents to $83.04 a barrel. The contract rose $1.41 to settle at $83.18, a 15-month high. The dollar strengthened by a further 0.9 percent to 93.15 yen after Japan's new finance minister called for a weaker yen. In unusually explicit remarks for a Japanese finance minister, Naoto Kan vowed to work closely with the central bank to steer the currency toward an “appropriate” level around 95 yen to the dollar. Kan takes over from Hirohisa Fujii, whose health problems led the 77-year-old to resign Wednesday after just four months as the top finance official. Meanwhile, the euro was down 0.6 percent on the day at $1.4325.
