GLOBAL MARKETS-Markets slammed by economic fears after U.S. data

Wed Oct 15, 2014 9:31am EDT
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* Caution reigns after disappointing China inflation reading

* Bond yields, oil prices hit fresh lows on demand fears (Adds declines in U.S., Europe equities)

By Lionel Laurent

LONDON, Oct 15 (Reuters) - Global stocks, bond yields and commodity prices slumped on Wednesday as investor fears over the state of the global economy intensified after U.S. producer prices fell for the first time in more than a year.

U.S. equity futures were down 1.2 percent - with big blocks of shares being sold - and the pan-European FTSEurofirst 300 index fell 1.9 percent after the release of the data, which fuelled worries of disinflation in the U.S.

Greece's benchmark equity index fell as much as 10 percent, though by 1307 GMT it had pared its losses to a drop of around 7 percent.

"There's been a big acceleration of the sell-off in stocks, with a spike in risk aversion spreading across the board to bonds and the currency market, and even a return of stress around Greek assets," Alexandre Baradez, chief market analyst at IG France.

"The newsflow is quickly deteriorating, including today's U.S. data. It's nothing to reassure investors. All the ingredients are there for further 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 lower-than-expected inflation reading from China.   Continued...