AMSTERDAM -- World markets were mixed Thursday as investors weighed an apparent turn for the worse in U.S. political leaders' attempt to reach an agreement on fiscal policy before the end of the year.
After a week of taking baby steps toward a compromise, President Barack Obama threatened Wednesday to veto a new plan floated by the speaker of the Republican-controlled Congress, John Boehner -- sparking an early sell-off on global markets.
The markets later recovered their poise, however, as some investors viewed the latest spat mostly as posturing.
By midday in Europe, Britain's FTSE 100 was up 0.1 percent to 5,967.69 while Germany's DAX fell 0.1 percent to 7,658.15. France's CAC-40 was fractionally higher at 3,664.69.
Stocks in Asia were also mixed. Japan's Nikkei 225 index fell 1.2 percent to close at 10,039.33, following a strong rally the day before. The Bank of Japan, as expected, announced at the end of a policy meeting that it was expanding its asset-purchase program by about 10 trillion yen ($119 billion) to shore up its flagging economy.
Hong Kong's Hang Seng rose 0.2 percent to 22,659.78. Australia's S&P/ASX 200 gained 0.4 percent to 4,634.10. Stocks in mainland China and Singapore rose while benchmarks in Taiwan, Indonesia and Thailand fell.
South Korea's Kospi rose 0.3 percent to 1,999.50, a day after the country elected Park Geun-hye as its first female president. She has pledged to curb the power of family-controlled business conglomerates but has warned against excessive regulations, Yonhap News Agency said.
Wall Street stocks appeared headed lower ahead of the opening bell. Dow Jones industrial futures fell 0.1 percent to 13,205 while S&P 500 futures were 0.1 percent lower at 1,431.30.
In broad terms, Obama wants to increase taxes on the rich, while Republicans want to cut government spending. They will both get their way if a compromise is not in place by Jan. 1, as Bush-era tax cuts expire and spending cuts kick in automatically.
If that happens, the U.S. will go over the so-called "fiscal cliff" -- taking dollars out of the pockets of taxpayers, as well as hurting government-linked businesses such as defense contractors. That's a one-two punch that many economists fear will push the economy back into recession.
With two weeks to go before the end of the year, markets are "likely to become more nervous by the day," said Mitul Kotecha of Credit Agricole CIB in Hong Kong.
Still, there is hope that they will reach a deal -- at the worst, early next year. "The overall trend is of improving risk appetite, so there is an overall belief that there will be a resolution," Kotecha said. "The big issue is how quickly will that come."
Among individual stocks, Mitsubishi Motors Corp. plunged 5.5 percent after Japan's Transport Ministry warned the carmaker over its improper handling and explanation of mini-vehicle recalls prompted by oil leaks, Kyodo News Agency said. Nissan Motor Co. lost 7.4 percent.
Benchmark crude for February delivery fell 11 cents to $89.87 per barrel in electronic trading on the New York Mercantile Exchange, after an extremely strong session Wednesday due to data showing a surprise decline in inventories. The contract closed Wednesday at $89.98 a barrel, up $1.58, or 1.8 percent.
In currencies, the euro was a touch stronger at $1.3262 from $1.3247 late Wednesday in New York. The dollar strengthened slightly to 83.99 yen from 84.20 yen.