September 20, 2012 / 3:52 AM / 5 years ago

Growth and debt crisis concerns drive shares, euro lower

A woman smiles as she walks past an electronic board displaying graphs showing recent movements of Japanese market indices, outside a brokerage in Tokyo February 15, 2012.Yuriko Nakao

LONDON (Reuters) - Global shares, the euro and oil prices fell on Thursday after weak Chinese and euro zone data underlined worries about global economic growth.

World shares and other risk markets have lost momentum this week with investors taking stock after the central banks of the United States, Japan and euro zone outlined plans for economic stimulus, driving a near 17 percent rise in the MNSI global index .MIWD00000PUS since June.

Wall Street was expected to open lower on Thursday. U.S. S&P stock futures pointed to a 0.3 percent drop at the start of trade with investors likely to latch on to the downbeat European and Asian mood.

"We have had the central banks come into action but some of the euphoria has already evaporated and we are looking at the economic data again which, generally speaking, are relatively weak," said Rabobank strategist Philip Marey.

Marey pointed to the Philly Fed index series due at 10 a.m. EDT (1400 GMT). "Another weak number could confirm that things aren't going as they should," he said.

A Reuters poll of 56 analysts sees the Philly Fed index improving to -4.0 from -7.1. Unemployment and consumer confidence data will also be released.

European equities .FTEU3 were down 0.3 percent by 1215 GMT and the MSCI world index was lower for the third time in four sessions. Markets in London, Paris and Frankfurt fell between 0.5 and 0.7 percent.

Euro zone Purchasing Managers Index data underlined the effect of the bloc's debt crisis. The composite PMI, which combines data from the manufacturing and services surveys, fell to 45.9 from 46.3 in August, its lowest since June 2009.

Of the national indexes, only Germany was brighter with the manufacturing PMI at its highest level since March, although still showing a contraction.

China's flash Purchasing Managers Index prompted the initial market gloom as it remained below 50 for an 11th month in a row, showing the sector was still shrinking.

"Activity in China is still weak and the Europeans are scared to death," said a Brussels-based trader. "The Spanish situation is nerve-wracking but I think Spain's problems are well known.

GROWTH WORRIES

Spain's 10-year borrowing costs fell to their lowest level since January at a debt auction, although the relief may be brief as Prime Minister Mariano Rajoy hesitates over seeking an international bailout which would open the way for the European Central Bank to buy Spanish government bonds.

German government bonds, favored by risk adverse investors, remained in demand, however. Bund futures were up 29 ticks to 140.00, adding to the 150 tick rebound they have seen this week having started at a 5-1/2 month low.

The weak data and the debt crisis worries also pushed the euro further away from last week's 4-1/2 month high, hitting a one week low of $1.294 before a small recovery.

Problems in Greece are back in focus after wrangling between Athens and the "troika" of inspectors from the European Commission, ECB and IMF over ways to stabilize the country's debts. The head of one of Germany's biggest banks, Commerzbank, warned on Thursday he thought another Greek debt restructuring would be needed.

Many economists agree. "What the market clearly wants is a haircut for the official sector debt," said Tobias Blattner at Daiwa Securities. "Even if they fix it again, find some tricks to keep Greece in the euro and come up with the preparations that show that Greek debt is sustainable, nobody will believe it without a haircut (debt restructuring)."

China's weak data were felt widely across Asian and commodity markets. Metals slipped with copper down over 1.5 percent and the Australian dollar, highly sensitive to its biggest export partner, slipped 0.8 percent.

Brent crude prices fell below $108 a barrel as a promise from Saudi Arabia to boost supply was compounded by China's weak data. Spot gold, which is at its highest in over half a year, dropped 0.5 percent to $1,759.89 an ounce.

Additional reporting by Francesco Canepa; editing by David Stamp

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