European shares, oil higher but growth worries linger

LONDON Fri Apr 19, 2013 2:24pm IST

Men look at a stock index board as passersby walk past outside a brokerage in Tokyo, April 16, 2013. REUTERS/Toru Hanai

Men look at a stock index board as passersby walk past outside a brokerage in Tokyo, April 16, 2013.

Credit: Reuters/Toru Hanai

Related Topics

LONDON (Reuters) - World stocks and oil prices edged back up on Friday but remained on course for one of their worst weeks of the year following a sell-off triggered by global economic growth concerns.

Surprisingly weak Chinese and U.S. economic data, on top of the International Monetary Fund's decision to trim its global growth forecast, hit commodities from gold to oil this week and brought the recent rally in equity markets to an abrupt halt.

Top European shares opened 0.4 percent on Friday, as London's FTSE, Frankfurt's DAX and the Paris CAC-40 rebounded 0.2, 0.1 and 0.6 percent respectively.

But four straight days of losses left them down 2.5 percent on the week, their worst since November last year and a fall that has pushed them back below where they started the year.

"The weaker Chinese data has combined with the numbers from the U.S. and it has been translated by people as that the global economy is actually at a much weaker stage than has been price in," said Daiwa Securities economist Tobias Blattner.

"I think the correction could continue if we get a snap election in Italy, but if you ignore the political risk I think we are going to go into a phase of muddling through where shares stay roughly where they are, but with a lot of volatility."

In the currency market, the yen fell back to 99.10 yen to the dollar after Japan said the Group of 20, which is meeting in Washington, had accepted that the Bank of Japan's sweeping monetary expansion is aimed at beating deflation rather than competitively weakening the yen.

The prospect of lower global growth, and with it weaker demand for goods used in industrial production, has weighed most heavily on commodity markets this week.

Investors in U.S.-based funds pulled a record $2.7 billion out of commodities and precious metals funds in the week ended April 17, Thomson Reuters Lipper data showed.

OilŸ was 0.5 percent higher to $99.59 a barrel as European trading began to gather pace but like a broad range of commodities was set for its third drop in as many weeks having started on Monday at $103.

Copper, a gauge for manufacturing and China-related growth, was hovering at $7,000 a tonne have broken below the threshold for the first time since late 2011 on Thursday.

In Asian trading, spot gold ticked back above $1,400 an ounce as buyers continued to filter back into the market, but the brutal sell-off at the start of the week left it heading for a fourth week of losses.

"This gives us some confidence that as panic selling passes, prices can rebound by $100-150 an ounce and trade in the $1,400-$1,550 range over the next 3-6 months," said Mark Pervan, global head of commodity strategy at ANZ, referring to a pickup in physical gold sales in India and China.

(Reporting by Marc Jones; editing by Philippa Fletcher)

FILED UNDER:
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage