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GLOBAL MARKETS-Shares punctured by two-pronged slowdown in China, Europe
November 20, 2014 / 9:43 AM / 3 years ago

GLOBAL MARKETS-Shares punctured by two-pronged slowdown in China, Europe

* European, Asian shares fall after weak euro zone, China
PMI data
    * Wall Street seen down amid U.S. indicator flurry
    * China flash PMI shows output shrank for 1st time in 6
months
    * Yen hits multi-year lows vs dollar, euro

    By Marc Jones
    LONDON, Nov 20 (Reuters) - World stocks extended losses on
Thursday as evidence suggested  both the Chinese and European
economies were slowing, while the yen slid to multi-year lows
against the dollar and euro on bets on more Japanese money
printing.
    Wall Street was expected to fall around 0.4 percent when
trading resumes  as signs of a pick-up in
underlying U.S. inflation and more encouraging signals from the
jobs market set the tone for manufacturing PMIs.
  
    Markets were also still digesting Wednesday's meeting
minutes from the U.S. central bank which suggested that it will
still push ahead with its first rate hike since the financial
crisis next year. 
    Other parts of the world continue to point in the opposite
direction, however, with further monetary easing measures
expected.
    The China flash HSBC/Markit manufacturing purchasing
managers' index showed factory output contracted in the world's
second-biggest economy for the first time in six months.
.
    In Europe signs were just as gloomy as the private sector in
its biggest economy, Germany, grew at the slowest rate in 16
months, and in France a slight pick-up was overshadowed by the
fastest drop in new business in over a year.
  
    "There has been a little bit of relief in markets recently,
but I think this will create another round of fears that the
euro zone is losing momentum," said Emile Cardon, a euro zone
strategist at Rabobank.
    China's data had left Asian stocks excluding
Japan's high-flying Nikkei at a month low, and Europe's
dour figures saw stock markets in London, Frankfurt
 and Paris tumble 0.7, 0.6 and 1.3 percent. 
    With the data also raising pressure on the European Central
Bank as it ponders possible asset-buying schemes, euro zone
government bond yields kicked lower and the euro fell for
the first time in three days. 
    "I think this increases the chances that the ECB will
actually start buying government bonds," added Rabobank's
Cardon.
   
    
    SINKING IRON 
    The Fed's hints of confidence about the economy further
highlighted the divergence in U.S. monetary policy relative to
Europe and Japan. The ECB and Bank of Japan are struggling to
stave off deflation and shore up their shaky economies.
    The minutes said although there were still serious question
marks about inflation, a number of Federal Reserve officials
felt it would be wise to provide some clarity soon on how
swiftly rates might rise. 
    Beaten down by the dollar again, the yen hit a seven-year
low and slid to a six year low against the euro 
despite the weak euro zone data. The euro fetched $1.2530
, off an overnight three-week high of $1.2602.
    In commodities, gold remained under pressure. It fell more
than 1 percent on Wednesday after a poll showed support among
Swiss voters slipping to 38 percent in favour of a referendum
that would require the Swiss National Bank (SNB) to boost its
gold reserves. 
    If the "Save our Swiss gold" proposal did pass, the SNB
would be banned from selling any of its gold reserves and would
have to hold at least 20 percent of its assets in the metal,
compared with 7.8 percent last month.
    China's data also landed another blow on the Australian
dollar as the price of iron ore .IO62-CNI=SI, one of its big
exports to China, hit a five-year low. 
    Copper dropped too, falling 0.2 percent, though
Brent oil stayed steady just above $78 a barrel as the
market waited for news on possible cuts in oil output ahead of
what is shaping up to be a landmark OPEC meeting next week.
 
    "The market has fallen to a level it is going to park at
until it gets anything more definitive about OPEC," said Ric
Spooner, chief market analyst at Sydney's CMC Markets.
    Among the larger emerging markets, South Africa and Turkey
both held interest rates despite high inflation while
rouble-traded Russian stocks hit their highest level of the year
on hopes the 30 percent slump in the rouble will lift exports.
   

 (Additional reporting by Keith Wallis in Singapore, editing by
John Stonestreet)

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