Japanese gloom ensures slow start to quarter for world stocks

Fri Apr 1, 2016 4:56am EDT
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By Jamie McGeever

LONDON (Reuters) - Gloomy Japanese manufacturing data on Friday ensured a downbeat start to the second quarter, driving stocks and oil lower and supporting safe-haven assets like gold and the Japanese yen.

Still bruised from a turbulent first quarter, investors took their cue from the Japanese data rather than more encouraging figures from China's manufacturers, before the pivotal U.S. payrolls report later in the day.

Japan's Nikkei .N225 sank 3.5 percent in its steepest daily fall since mid-February, dragging down shares across Asia. That set the bearish tone for Europe, where the main indices were all down more than 1 percent in early trading.

The pan-European index of leading 300 shares .FTEU3 fell to a one-month low of 1,303 points and U.S. stock futures signaled a decline of around 0.5 percent when trading opens ESc1 DJc1.

"Normally, we could expect some sort of upside in the wake of better-than-expected Chinese manufacturing numbers. Certainly if they were poor, we'd be looking at a major downdraft in equities," said Brenda Kelly, head analyst at London Capital Group. "But the focus appears to be on the negative."

Germany's DAX .GDAXI and France's CAC 40 .FCHI were both down around 1.7 percent. Britain's FTSE 100 .FTSE was down 1.2 percent.

Financials and insurance stocks were among the biggest decliners, led by a 9 percent fall in Zurich Insurance (ZURN.S: Quote), as its shares traded without the attraction of its latest dividend payout.

Earlier in Asia, a profit-dampening rise in the yen and selling by hedge funds for the new financial year weighed on Japanese stocks. But the real blow came from a survey of major manufacturers by the Bank of Japan, which found sentiment at its lowest in nearly three years.   Continued...

People walk through the lobby of the London Stock Exchange in London, Britain November 30, 2015. REUTERS/Suzanne Plunkett