Stocks off on World Bank call, Brent up on Iraq concern

Wed Jun 11, 2014 4:40pm EDT
 
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By Rodrigo Campos

NEW YORK (Reuters) - A gauge of world stock markets retreated from recent highs on Wednesday, pressured by a lower growth forecast from the World Bank and a profit warning from Lufthansa, while Brent crude rose on fears of disrupted supply from Iraq as violence escalates.

The euro fell for a fourth straight session against the U.S. dollar as monetary policy between the European Central Bank and the Federal Reserve diverges.

The World Bank late on Tuesday cut its global economic growth forecast for 2014 to 2.8 percent from 3.2 percent due to the impact of the Ukraine crisis and a harsh U.S. winter. The Bank was, however, confident economic activity was shifting to a stronger footing.

Stocks were lower in broad selling on Wall Street, with financials hurt by a report Bank of America's mortgage settlement with the U.S. government reached an impasse.

"The World Bank cutting estimates for global GDP got everybody’s attention in an environment where people are looking for a reason to take stocks down a little bit," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

The Dow Jones industrial average .DJI fell 102.04 points or 0.6 percent, to end at 16,843.88, the S&P 500 .SPX lost 6.9 points or 0.35 percent, to 1,943.89 and the Nasdaq Composite .IXIC dropped 6.07 points or 0.14 percent, to 4,331.93.

Adding to the sour tone, the defeat in a primary election of House Majority Leader Eric Cantor, a Republican, further dampened expectations of Washington passing any significant legislation before the November elections.

MSCI's global stocks gauge .MIWD00000PUS fell 0.2 percent after earlier flirting with a record high. The FTSEurofirst 300 index .FTEU3 lost 0.5 percent, weighed by a profit warning from German airline Lufthansa (LHAG.DE: Quote). [.EU]   Continued...

 
Traders work on the floor of the New York Stock Exchange June 10, 2014. REUTERS/Brendan McDermid