Global Markets: Global growth worry hits stocks, but dollar gains on U.S. data

By Chuck Mikolajczak

NEW YORK (Reuters) - A gauge of global stocks tumbled on Friday after weak economic data from China and Europe exacerbated worries about global growth as investors considered the broader impact of the trade dispute between the United States and China.

Euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed.

A separate survey showed French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years in the face of the anti-government protests.

Germany's private-sector expansion slowed to a four-year low, meanwhile, suggesting growth in Europe's largest economy may be weak in the final quarter.

The European data came on the heels of weak readings from China, where November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy as Beijing works to defuse its trade dispute with the United States.

"Focus has shifted from just the U.S.-China trade war to what's going on in the global economy and what that means for earnings for the U.S. corporations in 2019," said Art Hogan, chief market strategist at B. Riley FBR in New York.

"When you have slowdown in both China and Europe, whether they are related or not, it will impact the sales of S&P 500 companies."

On Wall Street, U.S. stocks were not only hampered by growth worries but by a drop in Johnson & Johnson shares, which lost 8.23 percent, its biggest drop in a decade, as the biggest drag on both the Dow and S&P 500 after Reuters reported that the pharma major knew that its baby powder was contaminated with cancer-causing asbestos.

The Dow Jones Industrial Average fell 279.99 points, or 1.14 percent, to 24,317.39, the S&P 500 lost 23.04 points, or 0.87 percent, to 2,627.5 and the Nasdaq Composite dropped 55.67 points, or 0.79 percent, to 7,014.66.

Stock markets in Europe were also lower on the growth concerns. The pan-European STOXX 600 index lost 0.52 percent and MSCI's gauge of stocks across the globe shed 0.97 percent. The STOXX was still on track for a weekly gain, however.

Despite the weak global data, the dollar strengthened on the back of solid U.S. data, as consumer spending gathered momentum in November, while industrial production rebounded, further cementing expectations the Federal Reserve will raise interest rates at its Dec. 18-19 meeting.

The dollar index rose 0.46 percent, with the euro down 0.58 percent to $1.1295.

Britain's pound once again weakened after two days of gains, as Prime Minister Theresa May said further assurances on her Brexit deal were possible after European Union leaders told her they would not be renegotiating the agreement and scorned her stilted defense of Britain's departure.

Sterling was last trading at $1.2558, down 0.77 percent on the day.

Benchmark 10-year U.S. Treasury notes last rose 5/32 in price to yield 2.8931 percent, from 2.911 percent late on Thursday.

(Additional reporting by Medha Singh in Bengaluru; editing by Jonathan Oatis)