Reuters: Market News: GLOBAL MARKETS-Shares fall on U.S., China growth worries

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GLOBAL MARKETS-Shares fall on U.S., China growth worries Mar 29th 2012, 05:31 Thu Mar 29, 2012 1:31am EDT * MSCI Asia ex-Japan eases for second day, Nikkei off 1-year peak * Commodity-linked shares down as oil falls * China stocks slip, drag Aussie lower * European shares likely decline By Chikako Mogi TOKYO, March 29 (Reuters) - Asian shares fell for the second straight day on Thursday as concerns about growth prospects in the world's two largest economies, the United States and China, prompted investors to trim their risk exposure ahead of the end of the quarter. European equity markets were expected to track Asian markets lower, with financial spreadbetters predicting major European markets to open down 0.1 to 0.3 percent. U.S. stock futures were steady. Commodity-linked assets were hurt, with crude oil extending losses and dragging oil-related Chinese shares lower, while weakness in Chinese markets weighed on the Australian dollar due to worries of lower demand from Australia's single largest export market. But a weaker Aussie lent some support to shares, making Australian equities the Asian region's relative outperformer with a 0.2 percent drop. MSCI's broadest index of Asia Pacific shares outside Japan fell 0.9 percent, retreating from a one-week high hit earlier this week. Still, the index is set for a quarterly gain of about 11 percent at current levels, the best showing since the third quarter of 2010 and the best first quarter in 21 years. Japan's Nikkei share average slipped 0.9 percent, moving further away from a one-year high marked on Tuesday, but looked set for its best January-March quarter in 24 years. The Standard & Poor's 500 Index was also on track to post its best first quarter in 14 years. "I think China will see a temporary slowdown, which will trigger monetary and fiscal easing, and overall, the landing of Chinese economy will be soft," said Dariusz Kowalczyk, senior economist and strategist, Asia ex-Japan, at Credit Agricole CIB. "But until evidence emerges to support such a scenario, investors will be concerned and this will cap their risk appetite, especially in the run up to the first-quarter GDP," he said. China is scheduled to release first-quarter gross domestic product data on April 13. The Shanghai Composite Index fell 1 percent after posting its worst day since November on Wednesday with a 2.7 percent plunge, while Hong Kong shares shed 1.3 percent. More earnings are due later on Thursday, including Bank of China Ltd, and any disappointing results could further undermine sentiment ahead of the quarter-end. "With the Chinese stock markets under pressure, the outlook on AUD will unlikely turnaround until we see some confirmation that the Chinese economy is not weakening too much and which should be affirmed by the release of the Chinese PMI (on Sunday)," said analysts at BNP Paribas. The Australian dollar fell 0.2 percent to $1.0370, well off a one-week high around $1.0557 reached on Tuesday. The euro edge up 0.1 percent at $1.3324. OIL RETREATS Data on Wednesday showed new orders for U.S. durable goods increased only modestly in February, below analysts' forecasts, while a gauge of future business investment also fell short of expectations, raising the prospect that economic growth in the first quarter could be lacklustre. Copper inched up 0.5 percent to $8,356 a tonne, recovering from a more than 2 percent drop on Wednesday after the durables data raised doubts about the pace of U.S. recovery. Oil extended the previous day's losses, after data showed U.S. crude oil inventories posted the largest weekly build since July 2010. Adding to the downward pressure, France said on Wednesday it was in talks with the United States and Britain on a possible release of strategic oil stocks to force down oil prices. A recent spike in oil prices has threatened the global economic recovery and eroded corporate profits. Brent crude, up more than 15 percent this quarter, eased 0.1 percent to $124.07 per barrel, while U.S. crude futures also shed 0.1 percent to $105.30 a barrel. Weaker equities prompted investors to sell bullion to cover losses while waiting for more clues on the health of the U.S. economy. Spot gold was down 0.2 percent to $1,660 an ounce. EUROPE IN RADAR Investors were reminded of the difficulty in resolving the euro zone's debt crisis on Wednesday when European Central Bank Governing Council member Jens Weidmann, who also heads Germany's Bundesbank, said that raising the firewall around stricken euro zone members would only buy time and end up running into financial and political constraints. His warning preceded a meeting of European Union economic and financial affairs ministers in Copenhagen on Friday and Saturday. "We are particularly bearish on the EUR, as we expect a re-emergence of sovereign concerns, and we also see downside for the AUD and modest weakness for CAD," Morgan Stanley said in a research note. Asian credit markets weakened, widening the spread on the iTraxx Asia ex-Japan investment-grade index by 4 basis points. Later in the session, German employment data and U.S. weekly jobless claims report will be released. Link this Share this Digg this Email Reprints

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