European stock markets were steady Thursday after sizable falls in Asia earlier as investors continued to worry that a global economic recovery later this year _ the main driver behind the rally since March _ could be choked off at birth by rising interest rates and oil prices, according to AP. In Europe, the FTSE 100 index of leading British shares was down only 1.71 points at 4,276.75 while France's CAC-40 index fell 3.20 points, or 0.1 percent, to 3,157.94. Germany's DAX was bucking the trend somewhat, trading 7.44 points, or 0.2 percent, higher at 4,807.42. Earlier in Asia, Japan's benchmark Nikkei 225 stock average fell 137.13 points, or 1.4 percent, to 9,703.72, and Hong Kong's Hang Seng dropped 307.94, or 1.7 percent, to 17,776.66. «Asian equity markets put in a mixed performance with equities generally unsettled by higher oil prices and upward pressure on long-term interest rates,» said Neil Mackinnon, chief economist at ECU Group. Interest rates, particularly on U.S. government bonds have been rising steadily over recent weeks on expectations that the U.S. Federal Reserve will raise borrowing costs sooner than previously anticipated. Meanwhile, oil prices have more than doubled over the past couple of months on hopes that a global economic rebound will boost demand for crude. The stock market rally since March had been fueled by hopes that the U.S. economy will recover from recession sooner than anticipated. As equities usually start rising 6 to 9 months before actual recovery emerges in the official data, this suggests investors believed the massive sell-off in markets during the most acute phase of the financial crisis was overdone. Some of the world's major equity indexes are now in positive territory for 2009. That optimism has dissipated in recent days, and analysts say investors need clearer evidence that the world economy and company earnings are recovering so that current stock valuations make sense. In March, many investors saw valuations around the world as particularly cheap and started buying into the market.
