Chinese inflation data hits world stocks

FE Team | Published: July 10, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

LONDON, July 9 (Reuters): World stocks fell on Wednesday as cooling Chinese inflation overnight added to weak European industrial data earlier in the week, pointing to slowing global growth and eclipsing a positive start to the US earnings season.
Miner Alcoa Inc reported results after Wall Street closed that beat analysts' expectations, but that was not enough to help European equities recover after posting their biggest fall in three months on Tuesday.
Major currencies and bond markets were steady ahead of two potentially major monetary policy events later in the day. The US Federal Reserve will release minutes of its latest policy meeting and European Central Bank President Mario Draghi is scheduled to speak.
"You tend to get an up move after a good sell-off, but I'd still be selling any strength on the stock markets for now," said Darren Courtney-Cook, head of trading at Central Markets Investment Management.
The FTSEuroFirst 300 index of leading European shares was down 0.1 per cent at 1,362 points in early trade, while Germany's DAX and France's CAC 40 were both flat at 9,779 points and 4,345 points, respectively.
Britain's FTSE 100 was down a quarter of 1 per cent at 6,721 points, dragged lower by the insurance sector. Admiral Group fell 6 per cent after issuing a trading statement update, and Aviva was down 3 per cent.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 per cent, touching its lowest point in a week and pulling away from last week's three-year highs. Japan's Nikkei stock average ended down 0.1 per cent.
Overnight, China's consumer price index rose 2.3 per cent in June from a year earlier, shy of the consensus forecast of 2.4 per cent, and a sign economic activity may be cooling.
"The weaker CPI reading ... provides further room for policy easing in the future on the one hand, and also signals the weak demand from the domestic economy on the other hand," said Wang Jun, an economist at the China Centre for International Economic Exchanges in Beijing.
In currency markets, China guided its yuan towards a three-month high against the dollar in what traders said was possibly a political move as China and the United States started their annual Strategic and Economic Dialogue.
The euro and sterling were unchanged at $1.3615 and $1.7121, respectively, while the dollar inched up against the yen to 101.60 yen.
The dollar has this week fallen back below a key long-term technical level against the yen. That's the 200-day moving average, which on Wednesday was 101.83 yen, suggesting it may not strengthen much - if at all - in the coming days and weeks.