China concerns hit stocks, gold rebound continues

Mon Jan 6, 2014 8:07am EST
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By Marc Jones

LONDON (Reuters) - Concerns over a slowdown in China's economy triggered a third day of falls for world shares on Monday and extended a spritely rebound in gold to leave it at a near three-week high.

Figures showing that China's services sector slowed sharply last month added to a stack of disappointing data from the world's second largest economy over the last week and left Wall Street eyeing another cautious start.

MSCI's world stock index .MIWD00000PUS, which tracks 45 countries, was at a three-week low following Beijing's hefty overnight drop and a rocky start to 2014 for Tokyo's Nikkei .N225 which saw its biggest fall in over two-months.

European moves were far more muted, however, as a raft of data showing the divergence between top economies Germany and France, but also the gradual recoveries in Italy and Spain, cushioned the impact.

Ahead of the start of U.S. trading, the pan-regional FTSEurofirst 300 .FTEU3 had fought back to neutral territory as London's FTSE .FTSE, Paris's CAC 40 .FCHI and Frankfurt's Dax .GDAXI all recovered from early tumbles.

"You could argue we have had some mixed news on the economic front, but I think in general the trend in the numbers is an improving one globally," said Robert Parkes, an equity strategist at HSBC.

"The China is data is relevant but of course so are the euro zone PMIs that we have seen... We don't believe we are going to see a hard landing in China."

Despite the recovery in stocks there was still plenty of evidence of the caution the China data had fostered among investors.   Continued...

Women, dressed in ceremonial kimonos, clap during the New Year opening ceremony at the Tokyo Stock Exchange (TSE), held to wish for the success of Japan's stock market, in Tokyo January 6, 2014. REUTERS/Toru Hanai