China property fears hurt shares, dollar climbs

SYDNEY, Aug 14 (Reuters): Shares slid on Monday as China's property woes amplified the case for stimulus even as Beijing seemed deaf to the calls, while rising Treasury yields lifted the dollar, which briefly poked its head above the closely watched 145 yen level.
There was plenty to be watching on the geopolitical front too, as Argentine voters punished the two main political forces in a primary election on Sunday, pushing a rock-singing libertarian outsider candidate into first place.
A day earlier, a Russian warship fired warning shots at a cargo ship in the southwestern Black Sea, heralding a new stage of the war that could impact oil and food prices. The Russian rouble on Monday softened past the psychologically key 100 per US dollar threshold for the first time since March, with President Vladimir Putin's economic advisor blaming loose monetary policy.
MSCI's world index was down 0.2 per cent, with most of the losses driven by Asian stocks.
The main ex-Japan index was down 1.7 per cent, after shedding 2 per cent last week. Japan's Nikkei was off 1.3 per cent.
Europe's broad STOXX 600 benchmark was flat but the miner-heavy and China-exposed FTSE lagged, falling 0.2 per cent.
"A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks," said AJ Bell investment director Russ Mould.
Trouble in China's largest private property developer, Country Garden , could have a chilling effect on homebuyers and financial institutions.
The company's shares plunged 18 per cent to a record low on Monday after its onshore bonds were suspended.
That was a fresh blow to policymakers trying to shore up confidence in a stuttering economy, aspirations that were not helped by weekend news two Chinese listed companies had not received payment on maturing investment products from Zhongrong International Trust Co.
Chinese blue chips fell 0.73 per cent, on top of a 3.4 per cent decline last week, amid disappointing economic news culminating in a dire report on new bank loans in July.
US share futures shrugged off the news however, rising 0.2 per cent, following losses on Friday when surprisingly high readings on US producer prices tested market optimism that inflation would cool enough to avoid further rate hikes.
On this week's data docket are figures on US retail sales this week are forecast to show a 0.4 per cent pick up in spending, with risks on the high side thanks in part to Amazon's Prime Day.
Such an outcome would challenge the market's benign outlook for rates, with futures implying a 70 per cent chance the Federal Reserve is done hiking. The market also has more than 120 basis points of cuts priced in for next year starting from around March.
Minutes of the Fed's last meeting are due on Wednesday and could show members wanted to keep their options open on further hikes.
The resilience of the economy combined with a truly massive government borrowing requirement kept 10-year Treasury yields up at 4.15 per cent, after a rise of 12 basis points last week.
That rise juiced the dollar against the low-yielding yen, hoisting it as far as 145.22 and a peak not seen since November last year.