April 13, 2012 / 4:21 PM / 5 years ago

GLOBAL MARKETS-Stocks, euro, oil fall as China renews growth fears

6 Min Read

* Disappoint Chinese GDP growth fuels worries on world
    * Concerns re-emerge over euro zone debt crisis
    * Rising Spanish bond yields add to risk aversion
    * Cost to insure against Spanish default hits record high

    By Richard Leong	
    NEW YORK, April 13 (Reuters) - World stock and oil prices
fell on Friday after China reported disappointing growth for the
first quarter, stoking worries about the strength of the global
economy, while the euro slipped as a rise in Spain's borrowing
costs revived worries about the debt-plagued euro zone.	
    A sharp re-emergence of fears over contagion of the euro
zone debt crisis took a steep toll on bank shares in both Europe
and the United States, as well as dragging down the euro against
the dollar for the first time in three days.	
    The yield on Spain's 10-year government bonds came close to
testing 2012 highs, and the cost to insure against a Spanish
default jumped to record high.	
    "The underlying problem is the renewed concern that Europe
hasn't fixed its problem," said John De Clue, global market
strategist at U.S. Bank's wealth management group in
Minneapolis. "People are not comfortable going into the weekend
with a dark cloud." 	
    Reduced optimism about global growth spurred hedge funds and
other investors to shift cash into safe-haven U.S. and German
government debt ahead of the weekend, analysts and traders said.	
    China, the world's second largest economy, reported
first-quarter growth of 8.1 percent, the weakest in almost three
years and below market expectations for growth of 8.3 percent.
Market talk on Thursday that growth could come in at 9 percent
had spurred a rally in riskier assets 	
    "The Chinese GDP number was weaker than expected, and
everyone had used it as an excuse to rally yesterday," said
Peter Boockvar, equity strategist at Miller Tabak & Co in New
    Oil and other commodities fell on Friday on concerns about
slowing demand, while equity markets sold off on the fears over
    In late morning trading, the Dow Jones industrial average
 was down 84.73 points, or 0.65 percent, at 12,901.85. The
Standard & Poor's 500 Index was down 11.58 points, or
0.83 percent, at 1,375.99. The Nasdaq Composite Index 
was down 34.97 points, or 1.14 percent, at 3,020.58. 	
    "We are seeing some really serious stuff in the European
credit markets," said James Dailey, portfolio manager at the
TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.  	
   "The concern is now on global recession. The data out of
China and our consumer sentiment data point to a recession,
which the market has been in denial for awhile." 	
    U.S. data on Friday showed a modest decline in consumer
sentiment in early April. 	
    Banks were the biggest losers. The S&P financial sector
index fell 1.7 percent despite earnings from JPMorgan
Chase & Co and Wells Fargo & Co that beat Wall
Street's expectations. JPMorgan shares slid 2.1 percent, and
Wells Fargo shares fell 2.2 percent.  	
    The FTSEurofirst 300 index of top European shares
provisionally closed down 16.97 points, or 1.6 percent, at
1,027.22. The index was down 2.4 percent for the week for a
fourth consecutive weekly loss.  	
    Euro zone banking stocks slid, led by Italian lender
UniCredit, down 6.0 percent. Both Spanish and
Italian indexes were down more than 3 percent, lagging
core-Europe peers. 	
    The MSCI world stock index tumbled almost 1
    Gold prices fell, paring their biggest one-week rise since
late February.	
    In Europe, Spain's government bond yields rose and the cost
of insuring its debt hit an all-time high as its banks borrowed
a record amount from the European Central Bank, underscoring
fears about the finances of the euro zone's fourth biggest
economy. Spain tests market appetite for its debt next week.
    The yield on 10-year Spanish sovereign debt 
flirted with 6 percent, a 4-1/2-month high. The cost of insure
against a Spanish default jumped to 500 basis points for the
first time, according to data firm Markit. 	
    The euro was down 0.8 percent against the dollar at
$1.3075. The common currency was not expected to break out of
the lower end of the $1.30-$1.35 range it has traded in since
   Meanwhile the dollar gained versus other major currencies.
The dollar index rose 0.7 percent at 79.867. 	
    Brent crude futures in London lost 37 cents to
$121.34 a barrel. The front-month Brent contract is poised for a
fourth straight weekly decline, matching a similar losing streak
in late September. U.S. oil fell 47 cents to $103.17 per
   In other commodities, spot gold prices fell 0.63
percent at $1,664.50 an ounce with losses capped on expectations
for further monetary easing from Beijing after the weaker
first-quarter growth data. Copper prices also fell, shedding 2
percent over worries about demand from China, the world's top
metals consumer.	
   In the bond market, benchmark 10-year U.S. Treasury notes
 last traded up 20/32 in price with a yield at 1.99
   German Bund futures were up 66 basis points at
140.31, retracing the losses from the prior two days.

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