World equities fall on valuation fears, bonds gain

Fri Apr 11, 2014 1:55pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Global equity markets fell on Friday as fears on Wall Street about over-stretched stock valuations spread to Asia and Europe, pushing investors to the safety of bonds.

The Nasdaq composite, which has been pounded in recent days as investors bailed out of high-flying technology and biotech shares, slipped anew. The index on Thursday had recorded its biggest single-day percentage loss since November 2011.

The benchmark S&P 500 index was also lower after failing to hold a brief rebound, and was on target for its worst week since January. The Nasdaq biotech index , down more than 20 percent from late February, also tried to recover, but slid another 0.6 percent.

Benchmark 10-year Treasuries notes tracked the ups and downs on Wall Street, paring gains early in the session, then rising in choppy trade. With equities lower, the 10-year bond rose 2/32 in price to yield 2.6211 percent.

"This equity market meltdown has brought a 'fear' bid into bonds," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co in New York.

A benchmark of global equities fell to a two-week low, spurred by a broad risk-averse tenor among investors that led to selloffs in higher-yielding currencies and emerging market assets.

"There's been contagion from the correction in the U.S. which is probably not over. But the fact is, this is mostly a U.S. correction," said David Thebault, head of quantitative sales trading at Global Equities in Paris.

"People are getting out of overvalued sectors and looking for bargains elsewhere. The market's positive longer-term trend is still intact, this pullback will just remove the froth," he said.   Continued...

Traders work on the floor of the New York Stock Exchange April 11, 2014. REUTERS/Brendan McDermid