Growth worries hit shares and commodities

Thu Jun 21, 2012 7:54am EDT
 
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By Richard Hubbard

LONDON (Reuters) - Rising concern about global growth triggered falls in shares and commodities on Thursday after data showed Chinese and European factory activity slowing and the Federal Reserve extended its stimulus policy due to a weakening U.S. recovery.

In Europe, preliminary manufacturing and service sector data across the 17-nation euro area showed the downturn in the region was becoming entrenched as falling new orders and rising unemployment hit business confidence.

The survey data also showed that Germany's private sector shrank in June for the second month running, with manufacturing activity hitting a three-year low.

"It is a worryingly steep downturn we are seeing (in Europe) and it is spreading from the periphery, which has been falling at an increased rate, through to Germany," said Chris Williamson, chief economist at Markit, which compiled the data.

A similar survey of private sector activity in China, compiled by HSBC, found its factory sector had shrunk for an eighth straight month in June on weaker demand for exports.

Economic growth in the world's most populous nation is widely expected to have slowed for a sixth straight quarter in April through June as the country feels the impact of the euro area debt crisis and property controls weigh on domestic demand.

MSCI's global equity index .MIWD00000PUS saw a fall 0.4 percent to 309.95 points after all the data, snapping a week of steady gains. U.S. stocks are also set to open lower .N

Brent crude touched an 18-month low of $91 a barrel before recovering to around $91.62, copper dropped 1.5 percent to $7,442 a tonne and gold fell below $1,600 an ounce.   Continued...

 
Traders work at their desks in front of the Dax board at the Frankfurt stock exchange June 20, 2012. REUTERS/Remote/Fabrizio Bensch