Mounting global growth concerns push markets lower
LONDON (AP) ? Fears of an intensifying global economic slowdown pushed markets lower on Friday, when new surveys showed a contraction in the manufacturing sector in China, a bellwether for world demand as it produces and exports a huge amount of consumer goods.
An index compiled by HSBC of manufacturing activity in the world's second-largest economy fell to 48.1 points in March from 49.6 in February. Figures below 50 indicate that manufacturing is shrinking.
That data comes on top of trade figures showing both Chinese and global demand falling.
"The market is disappointed that China's manufacturing sector is shrinking, so we are seeing the start of a major correction," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
The lack of bold reaction from China's government is causing investor unease, analysts said. The government has indicated it favors a pro-growth policy but so far has not aggressively reduced reserve requirements for banks on a national scale or lowered interest rates.
After losses across Asia, Germany's DAX was down 0.7 percent at 6,935.06 while France's CAC-40 lost 0.8 percent to 3,444.19. Britain's FTSE 100 shed 0.5 percent to 5,816.38.
The euro rose 0.5 percent to $1.3266 while bond yields for Spain, one of Europe's weakest economies, briefly rose above 5.50 percent as worries resurfaced it might eventually need a bailout.
Wall Street opened slightly lower, with the Dow Jones industrial average shedding 0.1 percent to 13,035.55 and the S&P 500 down by the same rate at 1,391.15.
U.S. housing data failed to lift investors moods. The Commerce Department said new-home sales fell 1.6 percent last month, meaning sales have fallen nearly 7 percent since December. However, prices surged to their highest level in eight months, suggesting that builders anticipate more demand in the months ahead.
The housing market has been dragging on the economic recovery as an oversupply of homes has weakened construction and other trades in many parts of the country.
Later Friday, investors will eye comments by Federal Reserve Chairman Ben Bernanke, who will be delivering brief opening remarks at a conference on central banking in Washington.
Earlier in Asia, Japan's Nikkei 225 index dropped 1.1 percent to close at 10,011.47 as the country's formidable export sector faded amid fears of slowing overseas demand. The dollar rose to 82.70 yen from 82.59 yen late Thursday in New York.
Elsewhere, Hong Kong's Hang Seng lost 1.1 percent to 20,668.80 while South Korea's Kospi edged up marginally to 2,026.83.
Australia's S&P/ASX 200 fell nearly 0.1 percent to 4,270.40 as the country's mining and resource shares took a pounding over worries of reduced demand from China, the world's biggest consumer of raw materials.
Oil prices continued to rise, with the benchmark crude contract for May delivery up $1.31 at $106.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.92 to finish at $105.35 per barrel on the Nymex on Thursday.
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Pamela Sampson in Bangkok contributed to this report.
Source: http://news.yahoo.com/mounting-global-growth-concerns-push-markets-lower-104520652.html
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