GLOBAL MARKETS-Growth fears eclipse US earnings; Fed, Draghi eyed

Wed Jul 9, 2014 4:37am EDT

* Chinese inflation data hits stocks, outweighs Alcoa
earnings beat
    * Bonds, currencies flat before Fed minutes, Draghi

    By Jamie McGeever
    LONDON, July 9 (Reuters) - World stocks fell on Wednesday as
cooling Chinese inflation overnight added to weak European
industrial data earlier in the week, pointing to slowing global
growth and eclipsing a positive start to the U.S. earnings
season.
    Miner Alcoa Inc reported results after Wall Street
closed that beat analysts' expectations, but that was not enough
to help European equities recover after posting their biggest
fall in three months on Tuesday. 
    Major currencies and bond markets were steady ahead of two
potentially major monetary policy events later in the day. The
U.S. Federal Reserve will release minutes of its latest policy
meeting and European Central Bank President Mario Draghi is
scheduled to speak.
    "You tend to get an up move after a good sell-off, but I'd
still be selling any strength on the stock markets for now,"
said Darren Courtney-Cook, head of trading at Central Markets
Investment Management.
    The FTSEuroFirst 300 index of leading European shares was
down 0.1 percent at 1,362 points in early trade, while
Germany's DAX and France's CAC 40 were both flat at 9,779 points
 and 4,345 points, respectively.
    Britain's FTSE 100 was down a quarter of one percent at
6,721 points, dragged lower by the insurance sector.
Admiral Group fell 6 percent after issuing a trading
statement update, and Aviva was down 3 percent.
    Earlier, MSCI's broadest index of Asia-Pacific shares
outside Japan fell 0.7 percent, touching its
lowest point in a week and pulling away from last week's
three-year highs. Japan's Nikkei stock average ended
down 0.1 percent.
    Overnight, China's consumer price index rose 2.3 percent in
June from a year earlier, shy of the consensus forecast of 2.4
percent, and a sign economic activity may be cooling.
 
    "The weaker CPI reading ... provides further room for policy
easing in the future on the one hand, and also signals the weak
demand from the domestic economy on the other hand," said Wang
Jun, an economist at the China Centre for International Economic
Exchanges in Beijing.
        
    DRAGHI RETURNS TO LONDON
    In currency markets, China guided its yuan towards a
three-month high against the dollar in what traders said was
possibly a political move as China and the United States started
their annual Strategic and Economic Dialogue. 
    The euro and sterling were unchanged at $1.3615 and
$1.7121, respectively, while the dollar inched up against
the yen to 101.60 yen.
    The dollar has this week fallen back below a key long-term
technical level against the yen. That's the 200-day moving
average, which on Wednesday was 101.83 yen, suggesting it may
not strengthen much - if at all - in the coming days and weeks.
    Major bond markets were steady ahead of the Fed minutes and
Draghi's speech in London, where he delivered his famous speech
almost exactly two years ago pledging to do "whatever it takes"
to save the euro.
    The benchmark 10-year Treasury yield stood at
2.575 percent in early European trade, up one basis point from
the U.S. close of 2.565 percent.
    Upbeat June U.S. employment data last week has prompted some
Wall Street economists to predict the Fed will raise interest
rates earlier than previously thought. But yields have fallen
since then, with investors cautious about the strength of the
recovery.
    Downbeat German economic data on Tuesday kept the benchmark
Bund yield anchored, and in early trade on Wednesday it touched
its lowest in a year at 1.218 percent.
    Draghi takes the stage later in the day, and investors will
be looking for signs the ECB could take further easing steps to
support the euro zone economy.
    In commodities trading, Brent oil fell 0.4 percent
to $108.53 per barrel. It has lost 3.5 percent so far this
month.
    Gold rose 0.4 percent on the day to $1,324.00 an
ounce as markets waited for the Fed minutes. 

 (Reporting by Jamie McGeever, additional reporting by Sudip
Kar-Gupta in London and Aileen Wang in Beijing, editing by John
Stonestreet; To read Reuters Global Investing Blog click here;
 for the MacroScope Blog click on blogs.reuters.com/macroscope;
 for Hedge Fund Blog Hub click on blogs.reuters.com/hedgehub)
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