Shares in retreat as growth worries revive
By Richard Hubbard
LONDON (Reuters) - The euro dipped to just below recent highs and European stocks fell on Tuesday amid concern about the scale of China's growth slowdown, while investors eyed crucial talks between Italy's government and unions on labor reforms.
U.S. stock index futures also pointed to a weaker start on Wall street ahead of new data on the housing market, and after the S&P 500 .SPX advanced for a third straight session to within 10 percent of its all-time closing high.
Italian Prime Minister Mario Monti is meeting union bosses in Rome to reach a deal on reforming labor laws, seen as crucial to government efforts to revive the debt-laden economy in which factory output has fallen sharply.
Before the meeting, equity investors were trimming positions for a second day after a rally to an eight-month peak last week on signs of a recovery in the giant U.S. economy and after big improvements in corporate balance sheets.
U.S. data on new building permits and housing starts could give the market a fresh boost if it shows signs of a recovery.
"Strategically, I am bullish on equities," said Neil Dwane, chief investment officer for Europe at Allianz Global Investors/RCM. "The thing is that they have rallied quite a long way, so it's harder to be as confident when you think: have we solved any of the economic issues?"
The FTSE Eurofirst 300 .FTEU3 was down one percent at 1,094.40 points after snapping a four-session winning streak on Monday that saw it touch levels last seen in July.
Traders' growing nervousness about the outlook could be seen in the Euro STOXX 50 volatility index .V2TX, a key gauge of sentiment, which jumped 9.1 percent after three days of falls. The higher the volatility index, the lower the investor appetite to take on more risk. Continued...