World stocks slide ahead of crucial Japan, US data

[June 29, 2010]  BANGKOK (AP) -- World markets slid Tuesday as a mammoth share sale in China dragged Shanghai stocks down more than 4 percent and investors trimmed bets before the release of crucial indicators from the world's two biggest economies.

Investors were wary of riskier assets like stocks following a fall on Wall Street and dour Japanese economic data that could foreshadow weaker business confidence when the Bank of Japan's "tankan" survey is released on Thursday.

Markets are also jittery about the U.S. employment report due Friday. Muted job creation in the world's No. 1 economy would suggest an extended period of weak consumer spending that undermines Asia's export-reliant economies.

In early European trade, benchmarks in France, Britain and Germany were all down about 2 percent or more. The losses came amid a shutdown of Greek public services as workers walked off the job in a new nationwide general strike protesting austerity measures to reduce the country's yawning debt -- a problem afflicting a slew of European nations.

Futures pointed to losses on Wall Street with Dow futures off 113 points, or 1.1 percent, at 9,975.

In Asia, the Shanghai Composite Index dived 4.3 percent to a 14-month low of 2,427.05 as investors fretted that Agricultural Bank of China's record-breaking initial public offering will draw money away from other stocks and depress prices overall. The IPO, which has separate listings in Hong Kong and Shanghai, is expected to raise $23.2 billion, making it the world's largest.

"The market is facing a huge pressure on liquidity. It fell rapidly after a sluggish week because not much new capital is flowing in," said Zhang Fan, analyst at Debon Securities in Shanghai.

Japan's benchmark Nikkei 225 stock index lost 123.27 points, or 1.3 percent, to 9,570.67.

Sentiment was sluggish in Tokyo after government figures showed Japan's economic recovery faltered in May as moderating export demand dented factory output, household spending fell and the jobless rate unexpectedly rose for a third straight month.

South Korea's Kospi shed 1.4 percent to 1,707.65 and Australia's S&P/ASX 200 dropped 0.9 percent to 4,345.70.

Elsewhere, Hong Kong's Hang Seng retreated 2.3 percent to 20,248.90, Taiwan was off 1 percent and Singapore tumbled 1.6 percent.

In currencies, the dollar fell to 88.64 yen 89.36 yen in New York late Monday. The euro dropped to $1.2194 from $1.2275.

Benchmark crude for August delivery tumbled $1.53 to $76.76 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 61 cents to settle at $78.25 on Monday.

[Associated Press]

Associated Press researcher Bonnie Cao in Beijing contributed to this report.

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