Shares slide on China margin crackdown, dollar falls
By Herbert Lash
NEW YORK (Reuters) - Global equity markets fell on Friday on reports about a crackdown on margin lending in China, while the dollar retreated on views that stronger U.S. consumer prices were not enough to offset recent weak data that could slow a Federal Reserve interest rate hike.
China's securities regulator warned investors to be cautious as Chinese shares hit seven-year highs after seven weeks of gains. Retail investors are borrowing record amounts of money to buy stocks, pushing trading volumes to new highs.
China on Friday also allowed fund managers to lend stocks for short-selling and expanded the number of stocks investors can short to increase the supply of securities in the market.
Stocks in Europe and on Wall Street fell more than 1 percent on the China news and on worries Greece may run out of money as debt repayments loom. Peripheral euro zone government debt yields rose while core German bund yields set a record low.
A two-hour outage at news and market data provider Bloomberg LP also hit financial markets in Europe, prompting debt sales to be postponed and exacerbating a spike in volatility in European stocks.
Prospects have dimmed that Athens can strike a reform deal at a meeting next Friday to unlock much-needed bailout funds.
"China in general has been tightening up on some of the excesses in lending," said Rick Meckler, president of hedge fund LibertyView Capital Markets in Jersey City, New Jersey. "It's just another area that makes people think globally there's a bit of a top to this recent rally."
MSCI's all-country world index of equity performance in 46 countries fell 0.92 percent, while the FTSEurofirst 300 index of top European shares closed down 1.8 percent at 1,607.03. Germany's DAX fell 2.6 percent. Continued...