Market rally loses steam despite drop in US claims

LONDON (AP) — Higher-than-expected Chinese inflation figures on Thursday gave some investors a chance to cash in recent gains on the world's financial markets in spite of more good news from the U.S. with another fall in weekly jobless claims.

Nonetheless, many of the world's stock indexes remained within touching distance of their recent record highs after the 4,000 fall in U.S. claims to a new five-year low of 327,000.

"The latest reading continues to come in below forecast and so provides a positive surprise," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

However, the claims figures, coming on top of last week's surprisingly strong monthly nonfarm payrolls data for April, failed to help European stocks recover earlier losses or and give an early boost to U.S. trading.

In Europe, Germany's DAX, which has set a series of record highs, was up a further 0.16 percent at 8,262. The CAC-40 in France ended Thursday 0.7 percent lower at 3,942 while the FTSE 100 index of leading British shares dropped slightly, 0.02 percent, to 6,581, broadly unaffected by the expected decision by the Bank of England to keep its monetary policy unchanged.

Trading in many parts of Europe was light as many countries were on a public holiday, though markets remained open.

In the U.S., the Dow Jones industrial average was down 0.05 percent at 15,1097 while the broader S&P 500 index fell 0.2 percent to 1,628.

The claims figures helped shore up the dollar, which was making another attempt to breach the 100 yen mark. Several attempts over the past few weeks have just fallen short. It was 0.4 percent higher at 99.34 yen, while the euro was trading 0.4 percent lower at $1.3104.

Earlier, government figures showing China's consumer price index rose 2.4 percent in the year to April, up from 2.1 percent the previous month and ahead of expectations of a more modest advance to 2.2 percent, had given the markets a soft tone.

Many reasons have been cited for the recent strength of stock markets around the world, including hopes over the U.S. economy, a seeming easing in Europe's debt crisis and an aggressive new monetary policy from the Bank of Japan.

Earlier, Japan's Nikkei 225 index dropped 0.7 percent to 14,191.48 — a modest retreat after a strong run that's sent the Nikkei up to five-year highs.

Another aspect of the Bank of Japan's massive monetary stimulus has been to weaken the yen dramatically. That feeds through into stocks as a lower currency makes the country's exports relatively cheaper.

Elsewhere in Asia, Hong Kong's Hang Seng fell 0.1 percent to 23,211.48 after the Chinese inflation figures. However, mainland Chinese shares were mixed with the Shanghai Composite Index down 0.6 percent to 2,232.97 while the smaller Shenzhen Composite Index gained 0.2 percent to 967.69.

South Korea's Kospi index was also in focus as it jumped 1.2 percent to 1,979.45 after the Bank of Korea lowered its benchmark interest rate for the first time in seven months. In announcing that it was lowering the rate by a quarter percentage point to 2.5 percent, the Bank of Korea became the latest central bank to take steps to boost flagging economic growth.

Oil prices drifted lower following recent strong gains — the benchmark New York contract was down 83 cents at $95.79 a barrel.

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Bomb at Pakistan Islamist party rally kills 16

PARACHINAR, Pakistan (AP) — A bomb blast tore through a political rally held by an Islamist party in northwest Pakistan Monday, in an attack claimed by the Pakistani Taliban that killed 16 people and underscored an increase in violence ahead of the May 11 vote.

The explosion, at a rally held in the village of Sewak in the northwest Kurram tribal area, was the latest attack on candidates, political offices and election-related events as the vote approaches. Much of the violence is believed to have been carried out by the Taliban against three liberal and secular parties. But Monday's blast targeted a gathering of the Jamiat Ulema-e-Islam party which generally has a more favorable relationship with the militant group.

The bomb, which was apparently planted near the main stage of the rally, killed 16 and left 44 wounded, said Umar Khan, a doctor at the nearby Sada hospital where many of the wounded were initially taken.

Two party leaders who were speaking at the event escaped unharmed.

About 2,500 people had gathered at a local religious school to hear the candidates speak, said one man who was in the crowd, Sabir Gul. The massive explosion came just as one of the candidates ended his speech and was leaving the stage, he said.

One of the candidates, Ainuddin Shakir, told a local television station that the bomb appeared to have been detonated by remote control.

Another resident, Mohammad Jamil, attended the meeting with his brother and was in the dining hall eating when the explosion occurred. Political parties often give food to people at rallies who sometimes travel from nearby villages to hear candidates speak. Jamil said people attending the rally had been searched as they went into the gathering.

"There was a deafening sound which stunned me for a while but I quickly moved out of the dining hall," he said, describing a "hell-like" situation. "There were countless people bleeding and crying for help. My brother Khalil was among them."

The Jamiat Ulema-e-Islam party is considered supportive of the Afghan Taliban's fight against the United States and its allies in neighboring Afghanistan. It's also sympathetic to the Pakistani Taliban, which have been fighting Pakistani troops and would like to establish a hardline Islamic government in Pakistan. The group's leaders have generally opposed the Pakistani military's operations against militants in the tribal region and instead called for negotiating with the militants.

The Taliban have claimed responsibility in recent weeks for a string of attacks against secular Pakistani parties that have in general supported military intervention against the militants in the tribal regions.

Claiming responsibility for Monday's bombing, Pakistani Taliban spokesman Ahsanullah Ahsan said the attack was aimed at a candidate who had appeared at the rally — Munir Khan Orakzai. Ahsan said Orakzai was targeted because he supported operations against militants in the tribal areas when he was previously an independent parliamentarian.

The historic vote, scheduled for this Saturday, will be the first time a democratically elected civilian government completes its term and hands over power to another. But the ongoing attacks against candidates, their supporters and political offices has cast a shadow over the momentous occasion, and may deter many people from going to the polls.

There is also concern that the attacks could benefit the parties that take a softer line toward the militants, because they are able to campaign more freely ahead of the vote. But the Taliban has also condemned democracy as a whole, meaning that any political party taking part in the elections could be considered fair game by the militant group. Militants have called on people in many areas to stay away from the polls on election day.

Some militants in Pakistan have shown a willingness to target anyone connected to the U.S.-backed government in Pakistan, even those, like the head of Jamiat Ulema-e-Islam, who have called for negotiating with the Taliban in Pakistan or have been outspoken supporters of the Taliban in Afghanistan.

In 2011, a suicide bomber struck a convoy in which the party's head, Maulana Fazlur Rehman, was traveling through northwestern Pakistan, killing 12 people.

Monday's blast, said Raza Rumi from the Islamabad-based Jinnah Institute, showed that even groups such as Rehman's are not immune to the election-related violence.

"Any political force or religious group which adheres to the constitution of Pakistan .... is under attack from the militants. It's as simple as that," he said.

The violence is multi-faceted and reflects the various militant problems facing the Pakistani government and military.

Most of the violence has come in the northwest, where Pakistan has been battling militants intent on overthrowing the government, and in the southern city of Karachi, where Taliban fighters have gained a foothold. Numerous attacks have also hit candidates in the southwestern Baluchistan province, where Baluch rebels are battling Pakistani troops.

On Sunday in Baluchistan, two gunmen attacked a convoy of an independent candidate and killed two of his police guards.

On Friday, in Karachi, gunmen killed an anti-Taliban election candidate along with his 6-year-old son and a political activist.

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Santana reported from Islamabad. Zarar Khan in Islamabad and Rasool Dawar in Peshawar also contributed to this report.

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Capriles supporters rally in streets of Caracas

CARACAS, Venezuela (AP) — A general expectation that Hugo Chavez's hand-picked successor will win next weekend's presidential election didn't dim the spirits of more than 100,000 backers of challenger Henrique Capriles, who jammed the capital's center on Sunday.

Most of the people who converged by foot in the city center on a hot, sunny afternoon tried to shrug off forecasts of victory for Nicolas Maduro, who was sworn in as acting president after Hugo Chavez died March 5 following a long battle with cancer.

Capriles said the big turnout in the capital was evidence that he'd win at the ballot box next Sunday.

"Today the streets of Caracas were filled with happiness, today the streets of Caracas were filled with hope, today the streets of Caracas confirm what's going to happen," Capriles said.

Chavez had defeated Capriles in October, but by the slimmest margin of his 14-year tenure as president.

Maduro, who rose from bus driver and union organizer to foreign minister under Chavez, is expected to benefit from an emotional outpouring of solidarity among Chavistas who have benefited from the generous social welfare state he created under the socialist banner.

But many critics contend that Maduro has been saddled with a fiscal hangover due to heavy Chavez spending ahead of October's vote.

Jesus Barroso, a 52-year-old retiree, said he believes Maduro will win handily next Sunday. But he predicted Maduro would not be able complete the six-year term because economic and social woes would prompt Venezuelans to remove him through a recall.

"I don't think he'll last very long in the presidency," Barroso said.

Supporters of Capriles chanted anti-government slogans and waved red, yellow and blue Venezuelan flags as they converged on a main avenue in downtown Caracas, where the 40-year-old governor of central Miranda state, was scheduled to speak.

Upbeat demonstrators danced to music sound trucks, which blasted "Fresh Lie," a newly composed song by Puerto Rican salsa musician Willie Colon that pokes fun at Maduro.

Capriles has repeatedly accused Maduro of failing to resolve pressing problems including frequent power outages, crumbling infrastructure, shortages of basic foods and double-digit inflation, and supporters say Capriles can do better.

"He's capable of offering opportunities to get us out of this disaster," said Maria De Llano said of Capriles, noting that she has difficulty finding some medicines and foods such as coffee, sugar and chicken due to sporadic shortages.

Meanwhile, Maduro invoked Chavez during a rally in the southern state of Apure, telling his backers that "El Comandante" is watching over them from Heaven.

"He's protecting us," said Maduro, speaking as if Chavez were omnipresent.

Indeed, images of Chavez seem to be everywhere in Venezuela. His smiling face is posted on billboard along highways. State-run television channels regularly broadcast footage of his speeches.

And Maduro's campaign organizers set up loudspeakers that play sound bites of Chavez's voice at rallies.

A recent poll by the independent polling firm Datanalisis showed Capriles trailed Maduro 49 percent to 35 percent in a sampling of 800 voters from March 11-13. The poll, with 16 percent of respondents undecided, had a margin of error of 3.4 percentage points.

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Christopher Toothaker on Twitter: http://twitter.com/ctoothaker

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Mass rally in Pyongyang in support of Kim Jong Un

PYONGYANG, North Korea (AP) — Thousands of North Koreans have turned out for a mass rally at the main square in Pyongyang in support of their leader's call to arms.

Chanting "Death to the U.S. imperialists" and "Sweep away the U.S. aggressors," soldiers and students marched through Kim Il Sung Square in downtown Pyongyang on Friday during a 90-minute rally.

State media reported early Friday that leader Kim Jong Un called an emergency military meeting to order the army's rocket unit to prepare to strike the U.S. and South Korea in case of a "reckless provocation" by Washington or Seoul.

A full-blown North Korean attack is unlikely, though there are fears of a more localized conflict. Pyongyang has railed against the U.S. decision to send B-2 bombers for military drills with South Korea.

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Thousands at climate rally in Washington call on Obama to reject Keystone pipeline

WASHINGTON (Reuters) - Thousands of protesters gathered on the Washington's National Mall on Sunday calling on President Barack Obama to reject the controversial Keystone XL oil pipeline proposal and honor his inaugural pledge to act on climate change.

Organizers of the "Forward on Climate" event estimated that 35,000 people from 30 states turned out in cold, blustery conditions for what they said was the biggest climate rally in U.S. history. Police did not verify the crowd size.

Protesters also marched around the nearby White House, chanting "Keystone pipeline? Shut it down." Among the celebrities on hand were actresses Rosario Dawson and Evangeline Lilly, and hedge fund manager and environmentalist Tom Steyer.

The event came days after a bipartisan group of U.S. senators made the latest call for Obama to approve the $5.3 billion pipeline, seen by many as an engine for job growth and another step toward energy independence.

A new poll by Harris Interactive showed 69 percent of respondents said they support construction of the pipeline, with only 17 percent saying they oppose it.

One of Sunday's main organizers, climate activist Bill McKibben, said that approving the pipeline, which would transport crude oil from the oil sands of northern Alberta to refineries and ports in Texas, would be akin to lighting a "carbon bomb" that could cause irreparable harm to the climate.

"For 25 years our government has basically ignored the climate crisis: now people in large numbers are finally demanding they get to work," said McKibben, founder of the environmental group 350.org.

Other major organizing groups on Sunday included the Sierra Club and the Hip-Hop Caucus.

The proposed TransCanada Corp project has been pending for 4-1/2 years. A revised route through Nebraska, which would avoid crossing sensitive ecological zones and aquifers, was approved by that state's governor last month.

Backers of Keystone, which would transport 830,000 barrels of oil per day, say it would provide thousands of jobs in the United States and increase North American energy security.

Environmentalists oppose the pipeline because the oil sands extraction process is carbon intensive, and say the oil extracted is dirtier than traditional crude oil.

Van Jones, Obama's former green jobs adviser, said if the president approved the pipeline just weeks after pledging to act on climate change, it would overshadow other actions Obama takes to reduce pollution.

"There is nothing else you can do if you let that pipeline go through. It doesn't matter what you do on smog rules and automobile rules - you've already given the whole game way," said Jones, who is president of Rebuild the Dream, a non-government organization.

Democratic Senator Sheldon Whitehouse of Rhode Island, the lone member of Congress to speak at the rally, told Reuters Obama risked creating a "credibility gap" if he approved the pipeline.

"He would have to roll out a very complete and very strong package to offset something that on its own is described by government scientist as ‘game-over' on climate," he said.

Still, some of Obama's core constituents favor the pipeline, including the labor union AFL-CIO's building and construction unit, which sees the potential for job creation for its members, and certain Democratic lawmakers.

In January, nine Democratic senators joined 44 Republicans in urging the president to approve Keystone XL.

(Reporting By Valerie Volcovici; editing by Ros Krasny and Mohammad Zargham)

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