|
 A surprise bounce in French business activity boosted investor
sentiment in Europe, however, where markets were in large part
beholden to the sharp swings in shares of scandal-hit Volkswagen and
the broader auto sector.
In early trade the FTSEuroFirst index of leading 300 European
shares, Germany's DAX and France's CAC 40 were all up a third of one
percent, and Britain's FTSE 100 was up two thirds of one percent.
But Asian stocks posted their biggest single-day fall in a month,
with MSCI's broadest index of Asia-Pacific shares outside Japan down
2.3 percent, its biggest daily loss since Aug. 24, according to
Thomson Reuters data.
The MSCI world index was down 0.2 percent, marking the fourth
consecutive daily loss. S&P mini futures pointed to a slightly lower
open on Wall Street Wednesday, with concerns over China paramount.
The preliminary Caixin/Markit China Manufacturing Purchasing
Managers' Index (PMI) fell to 47.0 in September, the worst since
March 2009, missing market expectations for 47.5 and slipping from
August's final 47.3.
 Levels below 50 signify a contraction.
"The decline was driven by a fall in new orders and new export
orders. Falling demand both domestically and abroad is only going to
make the task of achieving 7 percent growth that much harder," said
Craig Erlam, senior market analyst at Oanda in London.
VW ROLLERCOASTER
The Chinese data came after the U.S. central bank refrained from
lifting interest rates for the first time in nearly a decade last
week, citing concerns that global problems, and China in particular,
may hurt the U.S. recovery.
On Tuesday, the Asian Development Bank lowered its growth forecast
for China to 6.8 percent for 2015.
European PMIs painted a more positive picture on Wednesday,
consistent with economic expansion across the continent in
September, albeit at a slightly slower pace than the previous month
due to weaker demand from Asia.
Volkswagen AG <VOWG_p.DE> was in the spotlight again after the
company said a scandal over falsified U.S. vehicle emission tests
could affect 11 million of its cars around the globe as
investigations of its diesel models multiplied, heaping fresh
pressure on CEO Martin Winterkorn.
The share price fell as much as 8 percent in early trade on
Wednesday before rebounding to trade up 2 percent. It plunged 19
percent on Monday and 20 percent on Tuesday.
"We are downgrading the sector to 'Neutral' and Volkswagen to
'Hold'. The company could face a fine of up to $18 billion,"
SocGen's equity strategy team wrote in a note on Wednesday.
[to top of second column] |
The resilience of European stocks, however, cooled overnight demand
for safe-haven fixed-income assets.
The benchmark two-year U.S. Treasury yield fell to 0.68 percent,
nearing a two-week low, but the yield on the 10-year U.S. bond rose
2 basis points to 2.15 percent.
Yields on benchmark German bonds also rose as much as 2 basis
points..
With little movement in relative U.S. and euro zone yields, the euro
held steady at $1.1125. The dollar was also little changed against
the yen at 120.20 yen.
In emerging markets, Brazil's real languished at a record low
against the dollar, having fallen through the 4 per dollar level on
Tuesday for the first time ever.. It has now lost around 35 percent
this year.
In commodities U.S. crude futures rose 1 percent to $46.84 per
barrel, while Brent futures also rose 1 percent firmer to $49.55.
Copper recovered in European trading from near four-week lows
overnight in Asia. It was last up 0.5 percent having earlier posted
its biggest one-day drop in more than two months as fund and
speculative selling pushed prices down following the Chinese PMI
report.
Demand for precious metals recovered in European trading, with spot
gold last up 0.2 percent at $1,126 an ounce.
(Reporting by Jamie McGeever; Editing by Toby Chopra; 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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