* Weak European car sales add to worries on global economy
* Gold recovers after sharp falls but remains volatile
* Brent crude drops below $98/barrel as demand worries
* Euro in biggest daily decline vs dollar in almost a year
By Herbert Lash
NEW YORK, April 17 World equity markets and
commodities fell on Wednesday as global growth concerns dented
investor sentiment yet again and disappointing earnings reports
weighed on Wall Street stocks.
Copper, considered a barometer for manufacturing and
China-related growth, fell more than 3 percent, weighed by
worries about the global economy and a 10.3 percent decline in
March European car sales, a key source of metals demand.
U.S. and European shares slid more than 1 percent after the
car sales report added to fears about Europe's economy and after
the International Monetary Fund on Tuesday downgraded its global
growth projections for this year and next.
Defying earlier industry predictions of a second-half
rebound, auto sales in Europe are headed for a sixth straight
annual decline to a two-decade low.
"The macro outlook remains bleak and equities markets are
still not pricing it in yet," said Jerome Troin-Lajous, a trader
with Louis Capital Markets. "It's time to get protection,
continue to get out of cyclical and industrial stocks, and turn
overweight (on) 'flight-to-safety' trades."
Gold rose in choppy trade after a slide to two-year lows
this week lured Asian buyers. Sentiment was severely shaken by
the biggest two-day rout in 30 years, which ended on Monday, and
gold is seen as vulnerable to further sell-offs.
Brent crude fell below $98 per barrel on the prospect of
sluggish U.S. and Chinese fuel demand that will be squeezed at
the same time by rising crude supplies in the United States.
The North Sea benchmark has lost 8 percent over the past six
sessions in a commodities rout triggered by data showing growth
in China, the world's second-largest oil consumer, slowed
unexpectedly in this year's first three months.
"At the moment the oil complex is in a technical downtrend
with the fundamentals being driven by a deteriorating demand
projection in a robust supply environment," said Dominick
Chirichella of Energy Management Institute.
TECHNOLOGY SHARES AMONG BIGGEST DECLINERS
The benchmark S&P 500 index retreated a day after its
second-best performance of the year on several disappointing
earnings reports and the drop in commodities.
Apple Inc fell below $400 a share for the first
time since late 2011 after a disappointing revenue forecast from
key supplier Cirrus Logic fanned fears of weakening
demand for the iPhone and iPad. The shares later pared some
losses, closing down 5.45 percent at $402.80.
"After Monday's gold sell-off spooked U.S. equities, it
seems as though the dip buyers are a bit less aggressive,
allowing the market to fall a bit more," said Gordon Charlop, a
managing director at Rosenblatt Securities in New York.
Speculation about a German debt downgrade sparked heavy
selling in Europe, which accelerated when Wall Street opened,
Stephen Massocca, managing director of Wedbush Morgan in San
Francisco, said equities had over-extended a recent rally that
was marked by few declines.
"It's hard to put your finger on one particular negative
thing that's driving this," Massocca said. "I don't think this
is going to get worse than this. It was a long overdue cleansing
of what had been complacency in terms of what the market was
The Dow Jones industrial average closed down 138.19
points, or 0.94 percent, at 14,618.59. The Standard & Poor's 500
Index fell 22.56 points, or 1.43 percent, at 1,552.01.
The Nasdaq Composite Index shed 59.96 points, or 1.84
percent, at 3,204.67.
Shares of Intel Corp, the world's largest
semiconductor maker, initially fell after it said its
current-quarter revenue would decline as much as 8 percent and
it trimmed its 2013 capital spending plans. Intel eked out a
gain, up 0.07 percent at $21.93.
Shares of Texas Instruments, another chipmaker, shed
4.3 percent. Bank of America Corp, the last of the four
big U.S. banks to report first-quarter results, said revenue
fell. Its shares fell 4.7 percent.
"Banks are clearly struggling," said Jim McDonald, chief
investment strategist at Chicago-based Northern Trust Global
Investments, which has $760 billion in assets. "Loan growth has
been disappointing, which points to economic growth not being
MSCI's all-country world equity index, which
tracks shares in 45 countries, dipped 1.3 percent to 355.34,
reversing some of Tuesday's sharp gains.
European shares fell to their lowest in about four months.
The broad FTSEurofirst 300 index fell for a fourth day,
closing down 1.6 percent at 1,147.76. The euro zone's blue-chip
Euro STOXX 50 index also retreated, falling 2.1
percent to 2,553.49.
Brent crude shed $2.22 to settle at $97.69 a barrel,
while U.S. crude fell $2.04 to settle at $86.68 a barrel.
Bonds resumed gains as world shares and industrial
commodities responded to the concerns about economic growth.
"Whether against stocks or commodities, the demand for
Treasuries remains firm," said Ian Lyngen, a senior government
bond strategist at CRT Capital Group in Stamford, Connecticut.
The benchmark 10-year U.S. Treasury note was up
7/32 in price to yield 1.6967 percent.
The euro suffered its biggest daily decline against the
dollar in nearly a year, weakened by talk of a euro zone
interest rate cut, while signs of economic malaise in Britain
and Canada added to the U.S. currency's appeal.
The euro fell 1.1 percent to $1.3030 after hitting a
seven-week high overnight, and was on track for its largest
one-day slide since June.
The yen also slipped against the dollar, with officials at a
weekend Group of 20 meeting in Washington not expected to scold
Japan for a monetary policy that has led to a sharp slide in the
The dollar rose 0.48 percent to 97.99 yen, although
it remained below the four-year high of 99.94 yen set on Reuters
data last week.
U.S. Comex June gold futures settled down $4.70 at
$1,382.70 an ounce. Turnover was heavy as trading volume has
exceeded its 30-day average, preliminary Reuters data showed.
Spot gold prices rose $6.27 to $1,374.00 an ounce.
Benchmark copper on the London Metal Exchange closed
down 2.8 percent at $7,080.