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 The FTSEurofirst 300 fell 1 percent, down 2.9 percent for the week
and set for its biggest weekly loss in ten.
Basic resources stocks were down more than 5.9 percent this week,
with energy shares down 4.8 percent over the same period.
"The markets are alarmed that there have been further sharp falls in
commodity prices," Russ Mould, investment director at AJ Bell, said
in a note.
"There is increasing evidence that global growth is slowing and
investor confidence has been hit as a result."
Commodity prices showed some signs of stabilization, although they
remained near multi-year lows.
Oil prices edged away from two-month lows, having tumbled to near
six and a half year lows this week. Prices had dipped to levels last
seen in August after concerns over Chinese growth rocked markets.
U.S. crude futures touched a 2-1/2 month low of $41.38 per barrel on
a persistent rise in U.S. stockpiles and were poised for a 5 percent
decline for the week.
Copper, often seen as a good gauge of the world's economic health
because of its extensive industrial use, touched a six-year low of
$4,787.50 per tonne, below its August trough. It was set for a 3.6
percent loss for the week.
James Butterfill, Head of Research & Investment Strategy at ETF
Securities, said he expected the supply of copper to tighten as
mining firms cut back on capital expenditure.
"We expect miners to continue to cut capex, which raises concerns
over their longer term profitability," he said.
"That's why we think we're nearing the floor in copper ... as the
cuts in capex will lead to a constriction on supply. Markets have
also priced in a big contraction in Chinese consumption, which the
data is not supporting."
Gold edged back up to $1,086.02 from a six-year low of $1,074.26 per
ounce.
RATE HIKE
Futures on Wall Street <ESc1> were down 0.2 percent. On Thursday
various Fed officials lined up behind a likely December interest
rate hike.
Stanley Fischer, the Fed's second-in-command, noted that the central
bank could move next month to raise interest rates, while New York
Fed President William Dudley said the risk of waiting too long was
now roughly in balance with the risk of moving too soon to normalize
rates.
U.S. retail sales, due later on Friday, will be closely monitored
for further clues about the likely timing of a U.S. rate hike.
Bets that the Federal Reserve will raise U.S. interest rates for the
first time in almost a decade next month saw investors pull out of
Treasuries at the fastest rate in 1-1/2 years over the last week,
Bank of America Merrill Lynch said on Friday.
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The big beneficiaries were European equity funds which are being
buoyed by the prospect of another dose of Mario Draghi's stimulus
from the European Central Bank next month, notching their 24th week
of gains in the last 26.
Expectations that the Fed may hike rates while the ECB may ease
policy further has pushed the two-year US-German yield gap to its
widest in 9 years and the 5-year spread to its widest since 1999.
December could also be the first time since bond markets crashed in
May 1994 that the Fed raises interest rates as Europe cuts.
The dollar index, which tracks the U.S. currency against a basket of
six of its major peers, has edged back from Tuesday's seven-month
high of 99.50 to last trade at 98.659, flat on the day.
The dollar was also flat at 122.60 yen, off Monday's 2-1/2-month
peak of 123.60.
The euro slipped 0.3 percent to $1.0786, remaining under pressure
after the ECB's Draghi singled out the currency's more robust
performance since May as one driver for a "weakening" outlook on
inflation on Thursday.
However, the euro looked set to end the week in positive territory,
its loss on the day leaving it well above $1.0700 and stymying those
who had expected the greenback to surge again after very strong jobs
data a week ago.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped
1.4 percent.
Japan's Nikkei closed down 0.5 percent, snapping a seven-day winning
streak, while the Shanghai Composite index slipped 1.4 percent.
MSCI's ACWI, the index compiler's broadest gauge of world shares
covering 46 markets fell to its lowest level in a month, having
slipped 3.5 percent from its 2 1/2-month high touched on Nov 4.
(Editing by Toby Chopra and Gareth Jones)
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