Volkswacht Bodensee - Europe stocks edge higher as traders eye China property risks

Developer Country Garden missed bond payments and warned of multibillion-dollar losses, deepening concerns over China's heavily indebted real estate sector and the potential fallout on the world's second-largest economy.

Frankfurt and Paris were up in early exchanges, though London was trading lower.

Hong Kong and Singapore shares ended down more than one percent. Tokyo closed down by a similar amount while Shanghai and Manila also closed in the red.

Country Garden's shares were down more than 18 percent at the close, days after its billionaire boss Yang Huiyan said the firm was "facing the greatest difficulties since our establishment".

Privately owned Country Garden is on Forbes' list of the 500 largest companies in the world.

The firm has long been deemed financially solid but was unable last Monday to make two bond payments, and after a 30-day grace period, the company risks defaulting in September if it still cannot pay.

Like its heavily indebted competitor Evergrande, any collapse of Country Garden would have catastrophic repercussions for the Chinese financial system and economy.

Fears for Chinese property companies were causing regional markets' gradual decline, said Stephen Innes of SPI Asset Management.

"This negative sentiment has spread to other Asian markets, resulting in a generally subdued atmosphere across all exchanges," he said.

In the foreign exchange market, the dollar at one point was fetching 145.10 yen on Monday, its strongest level against the Japanese currency since November.

But the yen rebounded and was trading at 144.80 per dollar when the market closed, against 144.93 yen seen Friday in New York.

The ruble slid past 100 against the dollar, its lowest level since March 23, 2022 -- shortly after Russia invaded Ukraine.

Traders were also watching US inflation risks after data on Friday showed a bigger-than-expected rise in wholesale inflation.

The coming US retail sales report for last month and the minutes of the July 26 Federal Open Market Committee meeting are likely to indicate the probability of further interest rate hikes this year.

Strong than expected retail sales "could fuel the idea that the US economy will fall on its four feet and avoid recession" amid the Fed's rate hike cycle, said Swissquote analyst Ipek Ozkardeskaya.

"But it won't necessarily impact inflation expectations," she added.

- Key figures around 1000 GMT -

London - FTSE 100: DOWN 0.3 percent at 7,505.41 points

Frankfurt - DAX: UP 0.5 percent at 15,917.94

Paris - CAC 40: UP 0.3 percent at 7,362.23

EURO STOXX 50: UP 0.3 percent at 4,335.89

Hong Kong - Hang Seng Index: DOWN 1.6 percent at 18,773.55 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,178.43 (close)

Tokyo - Nikkei 225: DOWN 1.3 percent at 32,059.91 (close)

Euro/dollar: UP at $1.0951 from $1.0941

Pound/dollar: UP at $1.2696 from $1.2689

Euro/pound: UP at 86.24 pence from 86.23 pence

Dollar/yen: UP at 144.95 yen from 144.84 yen

West Texas Intermediate: DOWN 0.3 percent at $82.91 per barrel

Brent North Sea crude: DOWN 0.3 percent at $86.54 per barrel

H.Seidel--BTB