* MSCI world share index down for 3rd day after weak China
* Wall Street expected to hold ground
* European shares steady, safe-haven bonds make ground
* Japan's Nikkei tumbles 2.4 pct, Thai stocks fall to
* Gold climbs to near three-week high, copper at two-week
By Marc Jones
LONDON, Jan 6 Concerns over a slowdown in
China's economy triggered a third day of falls for world shares
on Monday and extended a spritely rebound in gold to leave it at
a near three-week high.
Figures showing that China's services sector slowed sharply
last month added to a stack of disappointing data from the
world's second largest economy over the last week and left Wall
Street eyeing another cautious start.
MSCI's world stock index, which tracks 45
countries, was at a three-week low following Beijing's hefty
overnight drop and a rocky start to 2014 for Tokyo's Nikkei
which saw its biggest fall in over two-months.
European moves were far more muted, however, as a raft of
data showing the divergence between top economies Germany and
France, but also the gradual recoveries in Italy and Spain,
cushioned the impact.
Ahead of the start of U.S. trading, the pan-regional
FTSEurofirst 300 had fought back to neutral territory
as London's FTSE, Paris's CAC 40 and Frankfurt's
Dax all recovered from early tumbles.
"You could argue we have had some mixed news on the economic
front, but I think in general the trend in the numbers is an
improving one globally," said Robert Parkes, an equity
strategist at HSBC.
"The China is data is relevant but of course so are the euro
zone PMIs that we have seen... We don't believe we are going to
see a hard landing in China."
Despite the recovery in stocks there was still plenty of
evidence of the caution the China data had fostered among
Safe-haven European bonds were holding gains,
copper - highly-attuned to China's fortunes - remained
firmly under pressure, while in the currency market the dollar
hovered near a four-week high.
The culprit for the moves was growth in the China's huge
services sector which slowed sharply in December to its lowest
point since August 2011.
The figures also came hot on the heels of a similar official
survey on Friday and two other PMIs last week showing factory
activity also soured.
China's CSI300 share index sagged 2.3 percent,
hitting a five-month low and MSCI's broadest index of
Asia-Pacific shares outside Japan slid 0.8
percent to a three-week trough.
The Chinese index is now down 3.9 percent since the start of
the year, adding to last year's 7.6 percent decline.
"The focal point of the Asian markets is more on Chinese
growth and on Chinese political situation and how it's going to
pan out this year" said Guy Stear, Asian credit and equity
strategist at Societe Generale, as opposed to worries much of
the world has about a reduction in U.S. central bank stimulus.
The main beneficiary of the Asian tensions remained gold as
it continued to rebound from last year's worst run in over three
It was sitting at $1,238 an ounce as afternoon dealing
gathered momentum in London, it's highest in three weeks and on
course for a fifth day of back-to-back gains. Oil bounced too
after four days of falls, with Brent at $107.76 a barrel.
"Weaker equities will have more of an impact on gold prices
than a stronger dollar," said Helen Lau, an analyst at UOB-Kay
Hian Securities in Hong Kong. "It is all about allocation by
On the opposite side of the China coin was the South Korean
won as it hit a near six-week low. Ongoing political
uncertainty in Thailand also left the baht at a near
four-year trough and Thai stocks at a 16-month low.
With Japanese equities taking a beating, the yen got some
respite against the dollar, up 0.3 percent at 104.55 yen.
And with the ECB's first meeting of the year looming on Thursday
the euro edged up from a one-month low to $1.36.
Wednesday's December Fed meeting minutes and then Friday's
non-farm payrolls data could determine the dollar's next move.
They should give further clues on how quickly the Fed is likely
to wind in its huge stimulus programme in the coming months.
"With the Fed having set the tapering process in motion, it
would likely take a fairly significant miss to derail tapering
expectations and push yields significantly lower from their
year-end levels," analysts at BNP Paribas wrote in a note.