Reuters: US Dollar Report: GLOBAL MARKETS-Stocks, oil fall on growth worries; dollar gains

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GLOBAL MARKETS-Stocks, oil fall on growth worries; dollar gains Mar 22nd 2012, 15:48 Thu Mar 22, 2012 11:48am EDT * Manufacturing sector contracts in China, Germany, France * U.S. jobless claims fall to 4-year low * Wall St drops around 0.5 pct, U.S. Treasuries prices rise By Walter Brandimarte NEW YORK, March 22 (Reuters) - Oil prices plunged more than 2 percent and global stocks retreated from recent highs o n Th ursday as manufacturing data from China and two key European economies fueled growth concerns. U.S. Treasuries prices and the dollar rose as risk aversion increased, although flows to less risky markets were tempered by fresh evidence the U.S. labor condition continues to strengthen. Growth concerns rose as China, a key engine of the global economy, saw its manufacturing sector contract for a fifth straight month in March. Th e data showed the economic slowdown was sharper than expected by Beijing, a top government think-tank said. [ID :nL3E8EL3V9] In the euro zone, a recession seemed unavoidable after G ermany and France also reported an unexpected contraction in manufacturing activity. Britain added to the gloom with a steeper-than-forecast fall in retail sales. "There's a bit of a China backlash at the moment, and we should expect more turbulence as people assess whether China is heading for a hard or a soft landing," said Filip Petersson, commodity strategist at SEB in Stockholm. The concern for growth in key manufacturing centers sent U.S. crude oil prices to a session low of $104.87 a barrel, down 2.24 percent, and headed to its lowest close since Feb. 17. Key Wall Street indexes fell more than half a percentage point. The Dow Jones industrial average was down 92.56 points, or 0.71 percent, at 13,032.06, while the Standard & Poor's 500 Index fell 12.38 points, or 0.88 percent, to 1,390.51. The Nasdaq Composite Index lost 20.57 points, or 0.67 percent, to 3,054.75. World stocks measured by the MSCI All-Country World Index dropped 0.8 percent. Earlier in the week, the index had closed near levels last seen in late July. In Europe, the FTSEurofirst 300 index fell 1.3 percent. U.S. Treasury bond prices rose as investors sought safety, although they trimmed part of their gains after data showed U.S. claims for unemployment benefits fell to a fresh four-year low last week. Benchmark 10-year Treasury notes were trading 12/32 higher in price to yield 2.25 percent, down from 2.3 percent late Wednesday. Encouraging jobs data also boosted the dollar against major trading-partner currencies, m any of which are direct beneficiaries of the Chinese economic boom. T he greenback was 0.2 percent higher against tha t basket of currencies, a ccording to the U.S. Dollar Index. The euro, pressured by worries of recession in the euro zone, w eakened 0.36 percent against the dollar, to $1.3162 . "When you get numbers like these out of the euro zone it definitely puts the growth outlook into question and points to a mild recession," said Niels Christensen, currency strategist at Nordea in Copenhagen. Gold prices slid to their lowest since mid January, pressured by the stronger dollar and declining expectations for further U.S. liquidity injections, which usually find their way into the gold market. Spot gold was down 0.88 percent to $1,635.30 an ounce. The metal earlier hit a low of $1,627.68 - its weakest since Jan. 13. Link this Share this Digg this Email Reprints

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