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Growth worry hits Europe, US; Japan shares rise

Growth worry hits Europe, US; Japan shares rise
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First Published: Wed, Mar 16 2011. 10 27 PM IST
Updated: Wed, Mar 16 2011. 10 27 PM IST
New York/ London: European and US shares fell on Wednesday as the nuclear crisis in Japan raised concern of slower growth worldwide, though Japanese stocks rebounded as some investors saw value after a steep sell-off.
Western markets also struggled with trouble in Bahrain and concerns about euro zone debt.
Wall Street opened lower as the price of oil climbed. Brent crude rose 2% to $110.65 per barrel after Bahraini security forces cracked down on protesters, with fighting in Libya simmering in the background.
“There is a perfect storm of uncertainty right now in terms of global growth, and markets are taking that into account,” said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.
Euro zone debt worries also surfaced, pressuring the euro. Portugal’s 12-month borrowing costs rose at a bill auction after a two-notch rating downgrade by Moody’s, showing the debt-laden country remains under pressure despite a euro zone deal to tackle the debt crisis.
Some sectors of financial markets were readjusting after a worldwide battering of riskier assets following the earthquake, tsunami and nuclear disasters that have hit Japan.
“It is too early to say if we are facing a trend reversal or just an interruption of the negative trend, but at least it is a stabilization,” said Enid Omerovic, analyst at Frankfurt-based Close Brothers Seydler AG.
MSCI’s all-country world stock index was up half a per cent. It fell as much as 4.5% over the past three sessions on the back of a near 20%, two-session dive on Japan’s Nikkei average.
Wednesday’s recovery was mainly boosted by Asia stocks, with the Nikkei regaining 5.7%. It remained down more than 11% for the year.
There was widespread belief that the post-earthquake sell-off had gone too far, too quickly, but there was still concern that the nuclear reactor crisis was unresolved.
The Dow Jones industrial average was down 50.86 points, or 0.43%, at 11,804.56. The Standard and Poor’s 500 Index was down 4.22 points, or 0.33%, at 1,277.65. The Nasdaq Composite Index was down 6.37 points, or 0.24%, at 2,660.96.
Europe’s Eurofirst 300 was flat. Banks led decliners after the Moody’s downgrade of Portuguese debt overnight.
US and European markets also weakened after the US government reported its producer price index surged at its fastest pace in more than one-and-a-half years in February.
The yen steadied around a four-month high versus the dollar.
The dollar traded lower by 0.2%, near a four-month low of 80.60 yen hit on Tuesday.
The dollar index against major currencies rose 0.39%, while the euro slipped 0.53% to $1.3922, having failed to break above a four-month high of $1.4036 hit earlier this month.
Spot gold prices rose $6.40, or 0.46%, to $1,400.30.
Akiko Takeda, Antoni Slodkowski, Naomi Tajitsu, Kirsten Donovan, Atul Prakash and Harro ten Wolde contributed to this story.
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First Published: Wed, Mar 16 2011. 10 27 PM IST
More Topics: Markets | Global | Japan | Stocks | Asia |