Global stocks ease as China worries resurface, oil drops

By Caroline Valetkevitch

NEW YORK (Reuters) - World stock markets declined on Tuesday after weak data from China reignited worries about a global economic slowdown and oil prices pulled back from recent strong gains.

China's February trade performance was worse than economists expected, with exports tumbling the most in over six years, days after leaders sought to reassure investors the outlook for world's second-largest economy remains solid.

"The data this morning has dampened sentiment more so than anything else at this point in terms of confirming some of the concerns regarding growth in China," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.

Weighing on oil prices, Kuwait said it would agree to an output freeze only if all major producers took part.

Brent crude futures settled at $39.65 a barrel, down $1.19, or 2.9 percent, while U.S. West Texas Intermediate (WTI) futures dropped $1.40, or 3.7 percent, to settle at $36.50.

The declines came a day after Brent and U.S. crude settled at their highest levels since December.

In the stock market, energy and materials shares led the way lower. The S&P energy index <.SPNY> fell 3.9 percent, while shares of Exxon Mobil were off 2 percent at $82.76.

The Dow Jones industrial average was down 86.32 points, or 0.51 percent, to 16,987.63, the S&P 500 lost 19.42 points, or 0.97 percent, to 1,982.34 and the Nasdaq Composite fell 45.72 points, or 0.97 percent, to 4,662.54.

U.S. stocks had sold off sharply at the start of the year amid worries about weakness in China and its impact on the global economy, but major indexes have retraced much of those losses in recent weeks.

MSCI's all-country world stock index was down 0.6 percent, while in Europe, the pan-regional FTSEurofirst 300 index ended down 0.9 percent.

The weak Chinese trade data stoked safe-haven demand for the yen and the Swiss franc as investors shed holdings of stocks and other risky investments on renewed concerns about global growth.

The dollar was down 0.6 percent at 112.68 yen , while the Swiss franc was up 0.2 percent against the greenback at 0.9928 franc .

U.S. Treasury yields fell in line with Japanese yields after the weak Chinese data, which increased demand for safe-haven U.S. government debt.

The benchmark 10-year note was last up 26/32 in price to yield 1.811 percent, down from 1.904 percent late on Monday.

Investors awaited Thursday's European Central Bank announcement. The bank is expected to announce more monetary stimulus measures to boost ultra-low inflation and sluggish growth in the euro zone.

A small 10 basis point cut to push its deposit rate deeper into negative territory is a foregone conclusion, while some type of adjustment of the bank's 1.5 trillion euro asset purchase program is also near certain.

(Additional reporting by Abhiram Nandakumar in Bengaluru, Sudip Kar-Gupta, Anirban Nag and Saikat Chatterjee; Editing by Nick Zieminski and Meredith Mazzilli)