Growth worries send world shares, euro lower

Mon Mar 5, 2012 7:30am EST
 
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By Richard Hubbard

LONDON (Reuters) - World stocks fell and the euro traded near two-week lows on Monday after fresh economic data raised expectations of a recession in Europe, and China signaled it would accept a slower growth rate.

Nervousness over whether Greece will complete a bond exchange with private creditors by March 8, to secure a 130 billion euro ($172 billion) bailout deal and avoid a messy debt default, also undermined demand for riskier assets.

U.S. stock index futures pointed to a lower open on Wall Street with January factory orders data and a key index of non-manufacturing activity in February, due at 1500 GMT, likely to extend the focus on the outlook for the global economy.

But it was a downward revision to euro zone surveys of purchasing managers' assessments for February which did much to wipe out the positive effects of last week's European Central Bank injection of three-year funding (LTRO) into the banks.

"The macro fundamentals, ex-Germany, do not look good with the sugar rush from the LTRO fading fast and peripheral debt coming under pressure again," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.7 percent at 1,079.29 points, although it is still up about 7.7 percent this year after hitting a seven-month high late last month.

The euro dipped by 0.1 percent at $1.3180, near its two-week low around $1.3172 on the PMI news.

"Persistent weakness in countries such as Italy and Spain will ... subdue any growth in other euro area countries, which traditionally depend on trade within the region, constraining recoveries in Germany, France and other northern euro nations,"   Continued...

 
The trading floor is pictured at the Frankfurt stock exchange January 16, 2012. REUTERS/Alex Domanski