April 13, 2012 / 7:51 AM / 6 years ago

GLOBAL MARKETS-Shares mixed, oil down on softer Chinese growth

* World shares steady after Chinese GDP; Asia up, Europe down

* Dollar firms, oil down in response to slower China growth

* JPMorgan results, modest US inflation fail to make impact

* Spanish bond yields rise again

By Mike Peacock

LONDON, April 13 (Reuters) - World shares held steady on Friday after China’s first-quarter growth failed to meet expectations, clouding the outlook for the world’s second largest economy but raising the prospect of more policy stimulus from Beijing.

By 1245 GMT, the MSCI world stock index was down 0.1 percent on the day, with Asian shares holding up well and Europe’s on the slide. U.S. stock futures pointed to a lower open on Wall Street.

Above-forecast earnings from U.S. investment bank JPMorgan Chase and a modest 0.3 percent rise in U.S. consumer prices in March failed to give stocks a fillip, with the Chinese data and a renewed rise in Spanish borrowing costs casting a longer shadow.

Copper and oil both retreated on concerns about demand from China, a voracious buyer of commodities.

Chinese growth eased to an annual rate of 8.1 percent in the first quarter from 8.9 percent in the previous quarter, below an 8.3 percent forecast and the weakest pace in nearly three years.

It was the fifth consecutive quarter of slowing GDP in the world’s most dynamic economy, on which hopes are pinned to sustain global growth, suggesting its slowdown is not over yet and more policy action would be needed to halt it.

“We still believe there should be more policy relaxation to add to growth domestically and offset weakness in exports,” said Kevin Lai, economist at Daiwa in Hong Kong.

He said Thursday’s stronger-than-expected Chinese new lending data was “an indication the government is quite ready to provide more monetary policy support to show that at least the economy is on track for a soft landing”.

MSCI’s broadest index of Asia Pacific shares outside Japan climbed 1.1 percent.

The FTSEurofirst 300 index of top European shares shed 1 percent, on track for a fourth consecutive week of losses. U.S. stock futures fell on concerns over Spain’s rising borrowing costs and the disappointing Chinese data.

Spain, now at the centre of the euro zone debt storm, saw its bond yields jump again after data showing Spanish banks borrowed heavily from the European Central Bank in March. The cost of insuring its debt against default hit an all-time high.

The country’s borrowing costs have spiked since the government ripped up a previously agreed deficit target in March, having dropped sharply earlier in the year thanks to a liquidity infusion of more than 1 trillion euros by the ECB.

“This benign environment has come to an end. It’s not that easy anymore for the financing agencies in Spain and Italy to sell their paper,” said Michael Leister, strategist at DZ Bank.


Copper led the way lower for commodities, with the London three-month benchmark down more than 1 percent at $8,120 a tonne by 1100 GMT, on track for a second consecutive week of losses.

“The focus is back on China at the moment, but really people should worry more about Europe,” VTB Capital analyst Andrey Kryuchenkov said.

Front-month Brent crude slipped 27 cents to $121.44 per barrel. The contract is poised for a fourth straight weekly decline, matching a similar losing streak in late September.

U.S. oil dropped 48 cents to $103.17 a barrel.

Commodities’ loss was the dollar’s gain.

It firmed by 0.35 percent against a basket of major currencies as the weaker-than-expected Chinese growth spurred some risk aversion, and safe haven German government bond futures put on half a point.

The euro and the Australian dollar eased in turn. The common currency was down 0.3 percent on the day against the dollar at $1.3138. It was not expected to break out of the lower end of the $1.30-$1.35 range it has traded in since January.

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