GLOBAL MARKETS-World stocks, copper and oil fall after weak China exports

Mon Mar 10, 2014 1:17pm EDT

* Decline in Chinese exports drives down commodity currencies

* Copper hits eight-month low

* Mining stocks hit by Chinese trade data

By Caroline Valetkevitch

NEW YORK, March 10 (Reuters) - World stock indexes fell and the prices of copper and oil sank on Monday after surprisingly weak Chinese trade data added to worries about a slowdown in the world's second-largest economy.

China's exports unexpectedly tumbled in February, falling 18.1 percent from a year earlier and swinging the trade balance into deficit. The data underscored recent concerns about the outlook for China's economy, even though the Lunar New Year holidays were blamed for the slide.

The data put a dampener on risk sentiment, which had been boosted briefly by Friday's stronger-than-expected U.S. non-farm payrolls report.

China's CSI300 share index plunged 3.3 percent to its lowest level in nearly nine months. Chinese gloom added to the strain in emerging markets, compounding worries that the U.S. Federal Reserve's reduction in stimulus will greatly curb the flow of money.

"The weak China trade balance data caused some flight to quality on less optimism about the global economy," said Jeffrey Young, interest rate strategist at Nomura in New York.

Prices on benchmark 10-year U.S. Treasuries were last up 3/32 to yield 2.78 percent.

The commodity-sensitive Australian and Canadian dollars declined, both losing as much as half a percent against the greenback in the wake of the plunge in exports from China.

On Wall Street, the Dow Jones industrial average fell 70.26 points or 0.43 percent, to 16,382.46, the S&P 500 lost 5.11 points or 0.27 percent, to 1,872.93 and the Nasdaq Composite dropped 11.229 points or 0.26 percent, to 4,324.994.

Shares of Freeport McMoRan Copper & Gold lost 3.3 percent to $31.14 as the signs of a slowing Chinese economy sent London copper to an eight-month low. The S&P materials index lost 0.6 percent.

European shares, as measured by the pan-European FTSEurofirst 300 index, closed down 0.5 percent, hit by declines in shares of mining companies sensitive to China's ferocious appetite for raw materials. A global stock index was down 0.6 percent and an emerging market stock index was down 1.3 percent.

German steel maker ThyssenKrupp, down 3 percent, was among the top losers in Europe as Chinese steel and iron ore futures slumped to their lowest levels ever on concerns about a slowdown in China, the world's top commodity buyer.

"Any poor news from China is always going to hit short-term market sentiment, especially in the mining sector, and fears of slower growth will hit base metals," said IPR Capital director Steven Mayne.

Despite weakness in Asian markets, a sense of relief in Europe that tensions between Russia and the West over Crimea had not escalated buoyed shares in early trading, though there was no escape from the undercurrent of unease.

On Wall Street, Boeing Co shares lost 2.5 percent to $125.31 and were the biggest drag on the Dow and S&P 500, after the plane maker said on Friday that "hairline cracks" had been discovered in the wings of about 40 787 Dreamliners that are in production, another setback for the company's newest jet.

Separately, the disappearance of a Malaysian jetliner, a Boeing 777-200ER, is an "unprecedented aviation mystery," a senior official said on Monday.

Shares of Freescale Semiconductor were down 2 percent at $22.92. Twenty Freescale employees were on the missing Malaysian plane, mostly engineers and other experts working to make the company's chip facilities in Tianjin, China, and Kuala Lumpur more efficient, said Mitch Haws, vice president, global communications and investor relations.

CHINESE DATA WEIGHS ON AUSTRALIAN, CANADIAN DOLLARS

The Aussie traded 0.4 percent lower at $0.9031, while the loonie was down 0.2 percent at $1.1104.

"The Chinese export numbers are the main driver this morning - you can see that the Aussie and Canadian dollars are both under pressure," said Alvin Tann, strategist with French bank Societe Generale in London.

The yuan earlier fell as much as 0.5 percent and Chinese short-term rates dropped after another low daily yuan rate from China's central bank added to speculation Beijing is quietly easing monetary policy to buttress wobbly growth.

The U.S. dollar held steady against major currencies, supported by hopes that U.S. job growth would pick up in the wake of last week's mildly encouraging report on hiring. The dollar index was little changed at 79.743.

In the metals markets, London copper hit an eight-month low. Three-month copper on the London Metal Exchange traded down 1.36 percent to $6,690 a tonne. It earlier slid as low as $6,608 a tonne, its weakest level since June 25 and within a whisker off nearly three-year lows.

Adding to the pressure was China's imports of unwrought copper, which fell 30 percent in February from January due to weak Shanghai copper prices. Imports were still up 27 percent from last year's levels.

The Chinese data also weighed on oil. Brent crude was trading 97 cents down at $108.03. U.S. oil fell $1.33 to $101.25 a barrel.