* World shares fall on global growth concerns
* U.S. earnings season set to put fresh focus on slowdown
* Oil dips below $112 as World Bank cuts Asian growth
* Euro edges down 0.5 pct to $1.2966
By Richard Hubbard
LONDON, Oct 8 Stocks and oil prices fell on
Monday after the World Bank cut its growth forecast for China,
adding to concerns about the outlook for the global economy and
Warnings from large multinationals such as FedEx Corp
and Hewlett-Packard Co, have made investors
cautious ahead of the earnings season, which starts on Tuesday.
The World Bank cut its growth forecast for East Asia,
including for China, undoing the positive sentiment that
followed a drop in the U.S. unemployment rate.
"The World Bank's downgrade is another indication of the
various concerns ... which are likely to be reflected in the
earnings results," Mike Lenhoff, chief strategist at Brewin
European shares were down around 1 percent in
morning trade, while Asian shares outside Japan fell 0.9
percent. Tokyo markets were shut for a holiday.
U.S. stock index futures were also pointing to a lower open
on Wall Street, with the S&P 500 futures down 0.35
percent. Columbus Day celebrations in United States on Monday
were likely to limit trading, although stock markets are open.
The MSCI world equity index was down 0.6
percent at 335.4 points.
The Standard & Poor's 500 index gained 5.8 percent
over the third quarter due to the central bank action but
earnings for the period are forecast to fall 2.4 percent from
the year-ago quarter.
China's role as the last major growth engine in the world
economy amplified the impact of the World Bank's forecasts in
foreign exchange and commodity markets.
The dollar was up 0.3 percent against a basket of
currencies, with its index at 79.62. However, it fell
against the yen, erasing some of the gains made on Friday
after a drop in the U.S> unemployment rate
The higher-yielding Australian dollar, which is
particularly sensitive to concerns about China given the
countries' close trading links, dropped to near a three-month at
Fears that slower economic growth would curb oil demand sent
Brent crude for November delivery down 82 cents to
$111.20 a barrel, and the gold price edged down 0.1
percent to $1,770 an ounce.
"The World Bank's pessimistic outlook for East Asian
economies and warning that China's economic slump could
deteriorate further ... had a hand in pushing prices lower,"
said David Wech, head of market analysis at Vienna-based
consultancy JBC Energy.
EUROPE UNCERTAINTY WEIGHS
In Europe fresh data showed investor sentiment had improved
for a second consecutive month in October thanks largely to the
monetary easing by central banks and Germany's backing for a new
permanent bailout fund for the European currency bloc.
German export data for August also surprised by jumping 2.4
percent month-on-month, far outperforming expectations for a
drop of 0.5 percent in a Reuters poll of 17 economists.
However, uncertainty over the next steps in solving the
region's debt crisis, coupled with the weak economic outlook
weighed on the euro which was 0.5 percent lower at $1.2960
, and down from Friday's two-week high of $1.3072.
European investors were focused on a meeting of euro zone
finance ministers who will formally launch the new bailout fund,
the European Stability Mechanism. They are also expected to
discuss the problems facing Spain and Greece.
The market was also bracing for German Chancellor Angela
Merkel's visit to Athens on Tuesday. Finance Minister Wolfgang
Schaeuble on Sunday said that Merkel's trip to Greece did not
necessarily mean Athens would receive the next tranche of aid
under its bailout.