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European markets underperform as strikes hit

AMSTERDAM (AP) -- World stock markets were mixed Wednesday, with European indexes down on worsening economic prospects and labor union strikes, while U.S. shares followed Asia's lead higher.

On Wall Street, stocks opened higher as Cisco's earnings came in ahead of expectations, September retail sales data were revised higher, and renewed efforts got under way in Washington to resolve the impending “fiscal cliff.”

The Dow Jones industrial average rose 0.2 percent to 12,778 and the S&P 500 added 0.2 percent to 1,377.32.

The “fiscal cliff” is a set of U.S. government spending cuts and tax increases that will take effect automatically at the beginning of next year unless U.S. leaders reach a compromise before then.

U.S. lawmakers gathered for talks on Tuesday, giving traders hope that at least a temporary compromise might somehow be reached before a deadline in seven weeks. President Barack Obama was to meet later Wednesday with about a dozen business executives who want to see an agreement before the end of the year.

“People feel there's been a significant pullback over fiscal cliff worries,” said Andrew Sullivan, an independent market analyst in Hong Kong. “The reality is we are likely to see a solution.”

In Europe, unions coordinated work stoppages across many countries to protest the austerity measures that governments have been imposing to reduce public debt. Flights were delayed around the continent due to transportation strikes.

Meanwhile, official figures showed industrial output in the 17-country eurozone dropped 2.5 percent on the month in September, worse than analysts had expected.

By mid-afternoon in Europe, Britain's FTSE 100 was down 0.5 percent to 5,756.66. Germany's DAX was 0.3 percent lower at 7,146.73 and France's CAC-40 shed 0.3 percent to 3,421.33.

“September's plunge in eurozone industrial production provides firm evidence that the economic outlook in the region is continuing to deteriorate,” said Ben May, an analyst at London-based Capital Economics. “We expect the eurozone to fall deeper into recession in the latter part of this year and worse is to come in 2013.”

In Asia, traders were hopeful that a transition of power in China will be followed by greater initiatives to shore up its economy. On Wednesday, President Hu Jintao stepped aside to make way for Vice President Xi Jinping as party leader.

Hong Kong's Hang Seng jumped 1.2 percent to 21,441.99. Mainland Chinese shares also gained, with the Shanghai Composite Index rising 0.4 percent to 2,055.42. The Shenzhen Composite Index gained 0.3 percent to 818.60. Japan's Nikkei 225 rose marginally to close at 8,664.73

In other markets, Australia's S&P/ASX 200 gained 0.2 percent to close at 4,388.40. South Korea's Kospi brushed off earlier losses to rise 0.2 percent to 1,894.04.

Benchmark oil for December delivery was up 14 cents to $85.52 in electronic trading on the New York Mercantile Exchange. The contract fell 19 cents to finish at $85.38 per barrel on the Nymex on Tuesday.

The euro rose 0.3 percent to $1.2745 from $1.2704 late Tuesday in New York. The dollar rose strongly against the yen, up more than a percent to 80.30 yen from 79.41 yen.

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