* MSCI world share index dips 0.4 pct, European shares fall
* Euro recovers as ECB policymaker reassures markets
* German 10-year bond auction draws strong demand
* OPEC's weaker demand outlook limits oil gains
By Richard Hubbard
LONDON, Jan 16 World shares fell while prices of
safe-haven German bonds and U.S. Treasuries rose on Wednesday as
weak economic data from Europe raised concerns about the health
of the global economy.
However, the euro recovered some of its losses against the
dollar after a European Central Bank policymaker eased fears
that officials might undermine the currency's recent strength.
Industry figures showed that European new car sales plunged
in 2012 to their lowest level since 1995, with all major euro
zone markets suffering, whereas Britain and Sweden recorded
This came a day after Germany reported its economy shrank at
the fastest pace in almost three years in the final quarter of
2012, and the World Bank cut its global growth forecast for this
year to 2.4 percent from 3.0 percent
"Following the German growth numbers yesterday there is
simply a realisation the recession in the euro zone in the
fourth quarter will be much bigger than the previous consensus,"
said Daiwa Securities economist Tobias Blattner.
The MSCI world equity index was down 0.4
percent at under 349 points, while Europe's FTSE Eurofirst 300
index dipped 0.3 percent to 1,156.32 points, on course
for its fourth day of losses in the last five sessions.
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were 0.2 to 0.6 percent lower.
Large falls were also seen in Asia earlier where Japan's
benchmark Nikkei stock average shed 2.6 percent for its
largest daily fall in eight months.
U.S. stock index futures pointed to a similar trend when
Wall St reopens later.
The euro was trading just below $1.33 at around $1.3275
having made up some of the ground lost when the outgoing
head of Eurogroup, Jean-Claude Juncker, said the currency was
The turnaround came when ECB policymaker Ewald Nowotny said
the exchange rate was "not a matter of major concern",
reassuring investors that the central bank would not target a
weaker exchange rate to help the region's struggling economies.
In the bond markets Germany saw healthy demand for its debt
at an auction of new 10-year bonds.
"Uncertainties about the economic outlook and political
risks continue to loom and today's auction results are a sign
that market dealers still see some value in core (European)
debt," said Annalisa Piazza, market economist at Newedge.
Ten-year German bond yields in the secondary market fell two
basis points as prices rose to leave yields at 1.475 percent
U.S. Treasury prices, meanwhile, extended their recent gains
on concerns about the federal government's debt limit.
Assets traditionally viewed as offering protection against
risk have been boosted this week as political wrangling has
begun again over raising the government's self-imposed debt
limit, which is expected to be reached before March.
Benchmark U.S. 10-year T-notes were last up 8/32 in price to
yield 1.80 percent.
Gold was up 0.6 percent to $1,676.60 an ounce for a
third straight session of gains, supported by expectations that
the world's leading central banks will continue their
ultra-loose monetary policies.
Worries over supply saw platinum prices inch up 0.1
percent to $1,680.50 to mark a seventh straight session of
gains, its longest winning streak since early October.
Workers for top producer Anglo American Platinum downed
tools on Wednesday in protest at an announcement from the firm,
known as Amplats, that it would close mines and cut jobs.
Cold weather in Europe and the United States underpinned oil
prices but the rising fears over the global growth outlook meant
any gains were limited.
The Organization of the Petroleum Exporting Countries, in a
monthly report, also said demand for its crude to be lower than
expected in 2013 because of higher supply from rival producers.
Brent futures were up 18 cents to $110.48 a barrel,
while U.S. oil rose 5 cents to $93.33.