World stocks slump on growth outlook

Stocks declined, sending the global benchmark index to a one-week low, amid concern the economic recovery is faltering. Greek bonds fell after Moody’s Investors Service said the country has a 50 per cent chance of default.

The MSCI All-Country World Index slid 0.5 per cent at 8:45 a.m. in New York. Futures on the Standard & Poor’s 500 Index rose 0.3 per cent after the gauge tumbled the most since August yesterday. The yield on Greece’s 10-year bond jumped 11 basis points. The euro strengthened against 13 of its 16 major peers, adding 1 per cent to $1.4466. Sugar and wheat gained.

Economists cut their forecasts for US payroll gains in May after a private report yesterday showed employers added 38,000 jobs, less than a quarter of the median growth forecast in a survey. Data on Thursday may show US factory orders fell the most since October. Moody’s downgraded Greece to Caa1 from B1, putting it on a par with Cuba, according to a report yesterday.

“Risk aversion remains the main theme for markets,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a research note. Stocks are declining amid “constant body blows for the US economy with the data consistently bad,” he said.

The Stoxx Europe 600 Index dropped 0.8 per cent to a one- week low as all 19 industry groups retreated. Rio Tinto Group led losses among basic-resource producers, falling 2.6 per cent. Kingfisher Plc (KGF), Britain’s largest home-improvement retailer, slid 1.8 per cent after reporting earnings that missed some analysts’ estimates.

The gain in US index futures indicated the S&P 500 will recoup some of yesterday’s 2.3 per cent drop. More Americans than forecast filed applications for unemployment benefits last week, Labor Department data showed on Thursday. Tomorrow’s monthly payrolls data may show employers added 170,000 jobs in May, following a 244,000 increase in April, economists forecast.