* German Ifo, UK GDP reinforce European recovery picture
* Euro firms to $1.3210; German Bund futures ease
* European shares and commodities pressured by China worries
* Wall Street set to open lower
By Richard Hubbard
LONDON, July 25 World shares fell on Thursday as
confirmation that Europe is slowly dragging itself out of
recession failed to offset worries about China's slowdown and
its impact on corporate earnings.
Data showing better German business morale and the British
economy gathering pace came in line with expectations and
pointed to only modest growth ahead, doing little to spark fresh
demand from investors worried about developments in Asia.
"We don't expect a strong recovery in Europe," said Philippe
Gudin de Vallerin, head of European economics research at
Barclays. "Risks are also coming from China where we have seen
further evidence of its economy slowing."
Germany's influential Ifo think-tank said business morale in
Europe's largest economy had improved for a third straight month
in July thanks to higher exports and consumer demand.
Britain then reported its economy had grown 0.6 percent
between April and June compared with the previous three months,
and by 1.4 percent from the same period a year ago - its best
performance since early 2011.
A surprise drop in Spain's unemployment rate - the first for
two years - added to signs its long recession is bottoming out.
After the data, the euro edged up 0.1 percent to around
$1.3210 and German Bund futures slipped 0.2 percent,
but activity was light.
Share markets retreated after a recent strong run upwards as
investors fretted about mixed results from blue-chip companies
and China's slowdown.
Readings later on the health of the U.S. labour market and
on orders for long-lasting manufactured goods could stem the
declines but stock index futures signalled Wall Street would
join in the retracement.
Europe's broad FTSEurofirst 300 index had fallen
0.7 percent by 1200 GMT as it retreated from eight-week highs
scaled as fears of an early end to Federal Reserve's loose
monetary policy have eased.
BASF, the world's largest chemical company, was among the
biggest losers, citing China's slowdown a particular concern.
"The Chinese growth engine is no longer running at full
power," the German firm said, adding that it would have to slow
the pace of new staff additions in all emerging markets.
Data on Wednesday showed manufacturing in China running at
an 11-month low in July, complicating the government's efforts
to shift the economy away from its heavy reliance on exports,
and heightening fears of a sharp drop in growth.
Chinese stocks suffered their second consecutive loss on
Thursday despite measures from the government to spur the
economy, including help for exports and railway investment.
MSCI's broadest index of Asia-Pacific shares outside Japan
dropped 0.3 percent from the previous day's
seven-week closing high, to leave the MSCI world equity index
0.4 percent down.
Worries about China were also reflected in commodity markets
where copper fell over 1 percent to $6,969 a tonne,
ending a five-day run that had taken the industrial metal to a
Brent crude oil fell for a second day, down 35 cents to
$106.85 a barrel, after settling on Wednesday at its lowest
since July 4.
"China has been and remains the key driver of global oil
demand, the dynamism of which has this year been lagging
considerably behind the expansion of supply. Weaker demand from
China would thus cause the oversupply to increase even further,"
Carsten Fritsch of Commerzbank said.