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Global Markets: Shares drop on weak Europe data, renewed U.S.-China worries

Reuters  |  NEW YORK 

By Lewis Krauskopf

NEW YORK (Reuters) - Stocks around the world pulled back sharply on Thursday on fears of a global growth slowdown spreading to and renewed worries about any near-term resolution of U.S.-trade tensions, while the U.S. dollar strengthened for a sixth session.

MSCI's gauge of stocks across the globe shed 1.28 percent, on pace for its biggest one-day drop in more than a month as it receded from two-month highs reached earlier in the week. The pan-European STOXX 600 index lost 1.49 percent and Wall Street's S&P 500 benchmark index dropped 1.5 percent.

The sharply cut its forecasts for euro zone economic growth this year and next on expectations the bloc's largest countries will be held back by global trade tensions and domestic challenges. Germany's DAX stock index tumbled 2.7 percent as industrial output in Europe's biggest economy unexpectedly fell in December for the fourth consecutive month.

Safe-haven assets gained, including Japan's yen and gold.

"Even though we are in the midst of earnings season, the macro environment is really impacting global risk sentiment," said Katie Nixon, at in

"Fears of a more dramatic slowdown in are being joined with the fears around a slowdown in And the broad slowdown in global trade is having a direct impact on some of these economies and some of the results."

Equities declined more sharply following heightened concerns about U.S.-trade relations, including that U.S. and Chinese are unlikely to meet before their countries' March 1 deadline to reach a trade deal, according to two officials and a source familiar with the negotiations.

"kick-started us to the downside this morning and then there was follow-through from the Trump headline and all of a sudden you have an overdue sell-off on your hands," said Dennis Dick, proprietary at in

On Wall Street, the Dow Jones Industrial Average fell 347.6 points, or 1.37 percent, to 25,042.7, the S&P 500 lost 39.71 points, or 1.45 percent, to 2,691.9 and the Nasdaq Composite dropped 122.84 points, or 1.67 percent, to 7,252.45.

U.S. regional lender will buy rival for about $28 billion in stock, the biggest in about a decade. Shares of both banks rose.

The downgrade in European growth expectations filtered into markets, with the euro down 0.08 percent to $1.1351.

The dollar index, which weighs the greenback against a basket of six currencies, rose 0.08 percent, firming for a sixth session in a row.

The dollar's gains come despite the Federal Reserve's dovish shift on interest rates last week.

"When analyzing a currency's exchange rate, it should be relative to a peer. So far it seems none of these peers have a competitive advantage, making the dollar the less unloved currency," Hussein Sayed, at forex FXTM, said in a note.

yields fell for a third straight session. Benchmark U.S. 10-year notes last rose 9/32 in price to yield 2.6716 percent, from 2.704 percent late on Wednesday.

Oil fell as the market confronted concerns that global demand growth would lag in the coming year.

U.S. crude fell 3.41 percent to $52.17 per barrel and Brent was last at $60.99, down 2.71 percent on the day.

(Additional reporting by and in New York; Editing by and Dan Grebler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 07 2019. 23:20 IST