January 16, 2013 / 9:00 AM / 5 years ago

GLOBAL MARKETS-Shares retreat as economic growth concerns revive

* 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 (Reuters) - 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 growth.

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 “dangerously high”.

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.

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