March 5, 2012 / 12:35 AM / 8 years ago

Global shares fall on growth fears

NEW YORK (Reuters) - World equity markets slipped on Monday after economic data raised expectations of a recession in Europe and China signaled slower growth ahead, while profit-taking in the dollar lifted the euro.

The euro firmed from near two-week lows despite nervousness over whether Greece will complete a bond swap with private creditors by Thursday as part of a deal to secure a 130 billion euro ($172 billion) bailout and avoid a messy default.

Oil prices were tugged in both directions, initially falling on concerns that slower Chinese growth would cut the demand for fuel. Prices later bounced back on supply risks and tensions over Iran’s nuclear program.

Wall Street stocks followed declines in European and Asian stock markets, with a measure of equities’ performance in emerging markets down more than 1.0 percent.

“We are clearly looking at lower growth in Europe and China (and) as predicted, problems in Greece again,” said Steve Larkins, head of sales and trading at Seymour Pierce. “The fundies (fund managers) are more than happy to sit on their hands rather than expose themselves further.”

Investors shrugged off data showing the massive U.S. services sector expanded in February at its fastest pace in a year. The Institute for Supply Management said its services index rose to 57.3 from 56.8 in January, besting economists’ expectations of a drop to 56.1.

The Dow Jones industrial average .DJI was down 12.45 points, or 0.10 percent, at 12,965.12. The Standard & Poor's 500 Index .SPX was down 5.08 points, or 0.37 percent, at 1,364.55. The Nasdaq Composite Index .IXIC was down 31.73 points, or 1.07 percent, at 2,944.46.

The FTSEurofirst 300 .FTEU3 index of top European shares fell 0.6 percent to close at 1,080.54.

Basic resources stocks .SXPP in Europe were the top decliners on Monday, shedding 3.5 percent after China, the world’s largest consumer of raw materials, cut its annual growth target to an eight-year low.

In New York, materials shares were the biggest drags. The S&P materials sector index .GSPM fell 1.8 percent, while aluminum producer Alcoa Inc (AA.N) fell 3.4 percent to $9.89.

A downward revision to euro zone surveys of purchasing managers’ assessments for February wiped out much of the positive effects of last week’s European Central Bank injection of three-year funding to the banks.

“European data this morning was negative for the euro, but a lot of investors are quite short the euro, so we are starting to see some capitulation and selling on those positions,” said Charles St-Arnaud, foreign exchange strategist at Nomura Securities in New York.

“I would not read too much into the euro’s bounce as there are plenty of headwinds this week,” he said.

The euro was slightly higher, climbing about 0.2 percent to $1.3219, after earlier falling to near a two-week low around $1.3172.

MSCI’s all-country world equity index .MIWD00000PUS fell 0.7 percent to 329.53. Its emerging market index .MSCIEF slid 1.4 percent to 1,064.70.

Brent crude oil traded near break-even after retreating from early highs to fall below $124 a barrel on the prospect of slower global demand after China cut its growth target and Iraq said it had raised its oil production to a 30-year high.

Brent crude oil futures for April rose 55 cents to $124.20 a barrel. April crude settled up 2 cents at $106.72 a barrel.

U.S. Treasury debt prices eased as recent evidence the U.S. economic recovery is picking up steam undermined the safe-haven value of government debt.

The trading floor is pictured at the Frankfurt stock exchange January 16, 2012. REUTERS/Alex Domanski

Losses were limited, however, and yields remained well within recent ranges as poor euro zone data and concerns about Greece’s debt swap, along with China cutting its growth target, supported demand for lower-risk assets.

Benchmark 10-year Treasury notes were trading 8/32 lower in price to yield 2.0 percent.

Spot gold prices fell $9.60 to $1,702.20 an ounce.

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