By PAN PYLAS
AP Business Writer

(AP:LONDON) World stocks were mixed Thursday amid light end of year trading as ongoing concerns about the global economy continued to offset any relief provided by this week’s decision by the U.S. Federal Reserve to cut interest rates to near zero percent.

On Wall Street, the Dow Jones industrial average rose 20.07 points, or 0.2 percent, to 8,844.41 while the broader Standard & Poor’s 500 index was up 1.88 points, or 0.2 percent, at 906.30.

In Europe, Britain’s FTSE-100 was down 0.5 percent at 4,304.39, while Germany’s DAX rose 0.8 percent to 4,745.77. The CAC-40 in France was 1.0 percent lower at 3,209.33.

"Stock markets may have rebound from the lows seen in November but going into the year-end, the rally seems to be becoming more subdued despite cuts in interest rates," said Neil Mackinnon, chief economist at ECU Group.

On Tuesday, the Fed cut its target rate from 1 percent to a range between 0.0 percent and 0.25 percent range and confirmed that borrowing costs will likely remain at very low levels for quite some time yet. Early enthusiasm has since largely evaporated as investors assessed the decision as well as the Fed’s indication that it will continue to use unconventional measures in effect to print money to support the U.S. economy.

"In the cold light of day the response seems more muted than the Fed would have hoped for with equity markets giving back some of their recent gains," said Stuart Bennett, an analyst at Calyon Credit Agricole.

Afternoon trading was buoyed modestly by the news from the U.S. Labor Department that initial jobless claims fell by more than economists anticipated to 554,000 last week. The claims remain near last week’s 26-year high and the four-week moving average for claims is up, but investors had been bracing for a gloomier reading.

The problems facing the world’s largest economy remain acute, however, as illustrated in a raft of earnings reports.

Though FedEx Corp. reported a 3 percent rise in quarterly earnings, it announced further cost cuts as demand continues to wane. Ingersoll-Rand Co. cut its fourth quarter earnings forecast by more than half, while motor home maker Winnebago Industries Inc. swung to a loss.

Investors were waiting to hear President-elect Barack Obama’s stimulus plan, which could total as much as $850 billion, according to reports. The package would include new jobs, middle-class tax relief and expanded aid for the poor and the unemployed.

In Europe, the economic news appeared to be getting worse.

The Munich-based Ifo Institute said Thursday that German business confidence fell to its lowest point in over a quarter century in December as the global economic crisis stanched near-term prospects. The monthly index of business sentiment in Europe’s largest economy slipped to 82.6 points in December from 85.8 points in November.

In Britain, retail sales rose a monthly 0.3 percent in November, surprising analysts expecting a drop, but government debt ballooned to its highest in almost a quarter century, official figures showed.

In Asia, Japan’s Nikkei 225 stock average climbed 54.71 points, or 0.6 percent, to 8,667.23 while Hong Kong’s Hang Seng Index recovered near the end of the session to add 0.2 percent to 15,497.81.

Benchmarks in Australia, South Korea, Singapore and mainland China also advanced.

Oil prices continued falling Thursday to levels last seen over 4 years ago as persistent investor pessimism over global crude demand outweighed news of OPEC’s largest-ever production cut.

By mid-afternoon in Europe, light, sweet crude for February delivery was down 4 cents to $40.02 a barrel in electronic trading on the New York Mercantile Exchange.

Meanwhile, the dollar rallied 1.5 percent to 88.50 yen, having fallen Wednesday to near 13-year lows after the Fed statement. The euro though continued to gain, up 0.6 percent at $1.4489.

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AP writers Louise Watt in London and Jeremiah Marquez in Hong Kong contributed to this report.

Article can be seen at INO.com