News Column

World Shares Slide Amid Weak Business Data

May 23, 2013
euros and dollars

Global shares fell Thursday following the release of weak business data for China and Europe, combined with concerns that the US central bank might wind back its stimulus efforts.

European shares posted the biggest falls, with the benchmark Stoxx Europe 600 down 2 per cent at 304.33 points as the trading came to an end.

This came after signs that the US Federal Reserve was considering retreating from its stimulus programme, as well as release of downbeat economic indicators for China and the 17-member eurozone.

The drop in the Stoxx 600 reflected similar falls across national bourses, with London's FTSE 100 index down 2.18 per cent and Frankfurt's DAX falling 2.36 per cent in late afternoon trading. Stocks in Paris were off 2.29 per cent.

The sell off in European stocks came after Japanese stocks chalked up their biggest fall since the March 2011 earthquake and tsunami, plunging 7 per cent Thursday following an unexpected drop in Chinese purchasing managers' index for the manufacturing sector.

The falls in other parts of Asia were more modest, although stocks in Hong Kong closed down 2.54 per cent

The downbeat mood among investors in Asia and Europe also spread to Wall Street.

After a shaky start to the trading day, New York Dow Jones' Industrial Average was off 0.2 per cent as the European bourses began closing.

Dealers said the fall in European stocks reflected worries that moves by the US monetary authorities to pull back from their stimulus programme could make it more difficult for the eurozone to recover from recession.

Those concerns followed comments contained in the minutes of Wednesday's meeting by the Federal Reserve that it could trim its bond-buying scheme in the coming months.

This was followed by the release Thursday by the London-based research group Markit of its latest PMI for the eurozone.

The survey showed the eurozone facing a protracted recession despite signs that the economic downturn eased in May.

Still, forex investors took some heart from the PMI survey for the eurozone. The common currency rose 0.5 per cent to 1.2916 dollars in late European trading.

Earlier in the day, the HSBC bank said its preliminary PMI for China's manufacturing sector fell for the first time in seven months in May.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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