GLOBAL MARKETS-Bonds rise, oil falls as economic gloom persists

Wed Oct 15, 2014 4:28am EDT
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* Caution reigns after disappointing China inflation reading

* Global shares stabilise, Europe choppy on Shire M&A hit

* Bond yields, oil prices hit fresh lows on demand fears

By Lionel Laurent

LONDON, Oct 15 (Reuters) - Persistent fears over the health of the global economic recovery kept bond yields and oil prices falling on Wednesday, even as shares broadly stabilised after days of steep losses.

Market volatility has surged in recent weeks as investors weigh the timing of expected interest rate increases, especially in the United States, against disappointing macroeconomic signals such as a worse-than-expected inflation reading from China.

The MSCI All-Country World index was trading broadly flat at 0740 GMT, having fallen some 8 percent since the end of August.

There were pockets of choppiness in Europe, with Britain's FTSE 100 benchmark stock index down more than 1.2 percent, dragged lower by a 26 percent fall in the share price of drug company Shire after U.S. rival and suitor AbbVie warned it could reconsider plans to buy Shire.

Safe-haven government bonds across the euro zone performed better, with German bund yields hitting a record low as investors sought refuge from signs of cooling economic demand.   Continued...