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 A big fall in oil prices also weighed.
Chinese imports plunged 20 percent in September, casting doubt on
the strength of domestic demand in the economy, while oil fell more
than 5 percent overnight after a report that OPEC continued to boost
production.
Those factors overshadowed a bumper merger deal, which saw the
world's largest brewer Anheuser-Busch InBev <ABI.BR> take over
number two producer SABMiller <SAB.L> in a cash and share package
worth $104.4 billion.
Bond yields and emerging market currencies fell too, while dimming
prospects of a U.S. interest rate hike this year pushed the dollar
lower and lifted the euro above $1.14 for the first time in a month.
Weaker-than-expected UK inflation and German investor sentiment
reports also pushed bond yields lower.
"The specter of slowing growth in the world's second biggest economy
is now again presented in sharp relief – this in spite of the myriad
of stimulus measures undertaken by the PBOC (central bank) over the
past number of months," said Brenda Kelly, head analyst at London
Capital Group.
The MSCI world share index fell 0.5 percent <.MIWD00000PUS>, its
first fall in 10 sessions, ending the longest winning streak since
February.
In Europe, the FTSEuroFirst 300 index of leading European shares was
down 1.1 percent at 1,414 points <.FTEU3>, Germany's DAX was down 1
percent <.GDAXI>, France's CAC 40 was down 1.2 percent <.FCHI> and
Britain's FTSE 100 was down 0.8 percent <.FTSE>.
In Asia earlier, MSCI's broadest index of Asia-Pacific shares
outside Japan <.MIAPJ0000PUS> fell 1 percent from a two-month high
touched on Monday, while Japan's Nikkei <.N225> fell 1.1 percent.
Futures markets pointed to a fall of around 0.4 percent at the open
on Wall Street <ESc1>, where investors will also focus on third
quarter earnings from Intel <INTC.O> and JPMorgan.
THE DOLLAR YIELDS
China's trade data for September showed a 3.7 percent fall in
exports from the same period last year, less than the 6.3 percent
drop forecast by economists in a Reuters poll. Imports, however,
tumbled 20.4 percent.
The weakening economy prompted China's central bank on Monday to
expand a scheme that increases banks' ability to lend, lifting
mainland Chinese shares to seven-week highs.
On Tuesday, Shanghai shares edged up around 0.2 percent. It was the
index's fifth straight gain, a run not seen since July.
Oil prices recorded their biggest fall in six weeks on Monday after
a report that OPEC continued to boost crude production triggered a
wave of profit-taking from last week's 11-week high. [O/R]
[to top of second column] |
Crude prices struggled to recover any of that ground on Tuesday,
with Brent futures up only 0.2 percent at $49.97 per barrel and U.S.
futures flat at $47.12.
The soft Chinese data and oil price weakness were reminders that
inflation is not a problem, which fed into the view that the Fed is
in no hurry to raise rates.
Fed Governor Lael Brainard reinforced such expectations, saying late
on Monday the Fed should hold off on any interest rate hike until it
is clear that a global slowdown, difficulties in China, and other
international risks will not push the U.S. recovery off course.
The yields on 10- and 30-year U.S. Treasury bonds fell 4 basis
points to 2.05 percent and 2.88 percent, while benchmark German Bund
yields were down around 1 basis point.
The dollar's value against a basket of six major currencies dropped
to 94.5 on Tuesday, its lowest in almost a month, and the euro rose
as much as 0.5 percent to $1.1410.
"The drop in oil prices has taken Treasury yields back down again,
and tightening in the Treasury/Bund spread encourages euro/dollar to
probe the top of the current range - $1.1460 is the key level ...
and a test looks likely," said Societe Generale currency analysts in
a client note on Tuesday.
Commodity-linked currencies also slipped, with the Australian dollar
falling 1 percent to $0.7285 <AUD=D4>, off a two-month high of
$0.7382 set on Monday.
Emerging market currencies also lost momentum after recent gains.
The Indonesian rupiah <IDR=> and the Malaysian ringgit <MYR=>, big
winners last week from broad relief rally in risk assets, both fell
about 1 percent.
(Reporting by Jamie McGeever; Editing by Jeremy Gaunt; To read
Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting;
for the MacroScope Blog click on http://blogs.reuters.com/macroscope;
for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
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