World stocks down after Chinese inflation jump

World stocks down after Chinese inflation jump

London: European stock markets fell modestly on Thursday amid growing concerns of an overheating Chinese economy and as investors awaited further insight into the state of the US economic recovery.

In Europe, the FTSE 100 index of leading British shares was down 31.49 points, or 0.5%, at 5,609.08 while the CAC-40 in France was 22.14 points, or 0.6%, lower at 3,921.41. Germany’s DAX fell 13.04 points, or 0.2%, to 5,923.68.

In Asia, worries about rising inflationary pressures in China reined in any buying momentum, though Japan’s Nikkei 225 stock average gained 88.91 points, or 0.9%, to 10,653.70 as investors were boosted by a news report the government will soon upgrade its economic assessment for this year.

The markets are wary at the moment by concerns that the monetary authorities in China may start raising interest rates soon to keep a lid on mounting inflationary pressures—figures earlier showed that China’s inflation rate jumped to 2.7% in February over a year earlier from 1.5% in January.

Any moves to raise the cost of borrowing in China or curb lending by Chinese banks will stoke concerns around the world that Chinese economic growth will slow down—one of the major reasons behind the global recovery from recession has been elevated growth levels in China.

“The People’s Bank of China is behind the curve and needs to take action on the liabilities side of banks’ balance sheets," said Diana Choyleva, an analyst at Lombard Street Research.

In Australia too, there was a break in the recent slew of positive economic news.

The jobless rate edged up slightly to 5.3% in February, the first rise since peaking at 5.8% last October.

Hong Kong’s Hang Seng gained 19.91 points, or 0.1%, to 21,228.20 while South Korea’s Kospi shed 0.3% to 1,656.62. China’s Shanghai benchmark added 0.1% to 3,051.28 and India’s Sensex was up 0.2%. Australia’s index fell 0.1% and Taiwan’s market retreated 0.4%.

Oil prices were steady with benchmark crude for April delivery up 10 cents to $81.99 a barrel in electronic trading on the New York Mercantile Exchange.