London (AFP) – European and Asian stock markets extended a global sell-off Wednesday following sharp losses in New York as concerns about weak growth returned.
After a run of gains for equities, traders have been spooked by a string of disappointing data from China to Europe and the United States that has led them to question whether hopes of a nascent recovery were overdone.
However, the dollar has continued to recover from eight-month lows versus the euro on hints that the Federal Reserve may still hike US interest rates in June, analysts said.
While this makes the US currency a more attractive investment, higher borrowing costs can weigh on economic growth.
The euro hit $1.1616 on Tuesday, the highest point since late August, but was standing at $1.1493 in Wednesday deals.
“The US dollar index made a new low for the year yesterday, briefly recovering on the back of comments from the Fed’s Dennis Lockhart that a hike in interest rates at the June… meeting is still on the cards,” said Neil MacKinnon, economist at financial group VTB Capital.
Comments from Federal Reserve officials suggesting the US central bank could hike interest rates as soon as next month also provided support to the greenback against the yen after plummeting over the past month.
Across the Atlantic, the European Union on Tuesday cut its eurozone growth forecasts for this year, warning that global risks including the slowdown in China and the danger of Britain leaving the EU were having a damaging effect.
It was the latest in a flurry of data highlighting weaknesses in the global economy, including a shrinkage or slowdown of manufacturing activity in China, Britain and the United States.
The mining sector, already under pressure from weak demand growth for metals, took another knock Wednesday with BHP Billiton’s share price plunging on news that Brazilian prosecutors had slapped it with a US$43-billion (37-billion-euro) lawsuit over November’s deadly Samarco dam disaster.
BHP stock lost more than 9.0 percent in Sydney, while its London-listed shares were down 6.6 percent at 817.90 pence on London’s FTSE 100.
Sydney’s equity market closed down 1.5 percent overall on Wednesday. Across Asia, Hong Kong lost 0.7 percent and Seoul shed 0.5 percent.
Shanghai flitted between gains and losses after Chinese authorities hinted at unveiling measures to support the country’s stock markets. The city’s benchmark index ended 0.1-percent lower.
Tokyo remained closed for a public holiday.
The losses came after Wall Street and Europe’s main indexes were flooded in red ink on Tuesday.
– Key figures around 1015 GMT –
London – FTSE 100: DOWN 1.3 percent to 6,107.29
Frankfurt – DAX 30: DOWN 0.8 percent at 9,852.48
Paris – CAC 40: DOWN 0.8 percent at 4,338.91
EURO STOXX 50: DOWN 0.8 percent at 2,949.58
Hong Kong: DOWN 0.7 percent at 20,525.83 (close)
Shanghai: DOWN 0.1 percent at 2,991.27 (close)
Tokyo: Nikkei 225: Closed for public holiday
New York – Dow: DOWN 0.8 percent at 17,750.91 (close)
Euro/dollar: DOWN at $1.1493 from $1.1507 Tuesday
Dollar/yen: UP at 106.78 yen from 106.63 yen