World stocks fall on worries that growth in major economies will slow

World stock markets down on growth doubts

ROME — Global stock markets fell Thursday after weak manufacturing surveys provided new evidence that the recovery is slowing in the world’s biggest economies, from the U.S. to China and Europe.

The euro, however, gained ground against the dollar — trading 1.59 percent higher at $1.2427 — on signs that European banks are less strapped for cash than feared.

The FTSE 100 index of leading British shares slid 0.93 percent to 4871.08. Germany’s DAX was down by 0.88 percent to 5913.17, while France’s CAC-40 was 1.98 percent lower at 3374.59.

Wall Street followed the decline after receiving more grim data about the jobs market.

The Dow Jones industrial average was down 0.1 percent at 9,762.76 and the Standard & Poor’s 500 index was down 0.1 percent at 1,030.18.

Investors were trying to shake off a second straight disappointing report on the labor market, with data showing initial jobless claims rose unexpectedly last week to a seasonally adjusted 472,000. Economists polled by Thomson Reuters had forecast claims would fall to 452,000.

Negative manufacturing news out of China took the wind out of markets already smarting from Wall Street’s drop on Wednesday. The purchasing managers’ index in China declined to its lowest since February, indicating a cooling economy and dashing “any hopes that the Chinese economy would somehow come to the rescue with respect to risk appetite,” said Michael Hewson of CMC Markets.

That news was followed quickly by confirmation that the eurozone’s manufacturing activity lost momentum for a second month running in June, disappointing news since the manufacturing sector had been the most dynamic.

“The second successive drop in the PMI in June suggests that the eurozone’s manufacturing upturn may now be flagging,” said Howard Archer, chief European economist at IHS Global Insight. “This could be partly due to inventory corrections drawing to a close in some countries, but it may also be a sign that the eurozone debt crisis and an associated intensified tightening of fiscal policy in a number of countries is having a dampening impact on economic activity.”

A day after receiving a warning about its credit rating, Spain reassured markets by successfully raising euro3.5 billion ($4.3 billion) Thursday in an oversubscribed bond sale.

A Treasury official said the oversubscription ratio showed the Moody’s warning went “totally unnoticed.”

Moody’s upset the markets when it said late Wednesday it has placed Spain’s AAA sovereign rating under review for a possible downgrade because of worsening economic prospects. Hewson said the move would not have come as a surprise and had probably already been priced into the markets.

A key central bank report released Thursday showed business confidence among Japan’s biggest manufacturers improved for a fifth straight quarter, but the Tokyo market was taking its cues from Wall Street, which closed out a painful second quarter Wednesday, leaving investors with heavy losses.

Japan’s benchmark Nikkei 225 stock index closed down 191.04 points, or 2 percent, to 9,191.60 — a seven-month low and extending losses from Wednesday’s fall of nearly 2 percent.

South Korea’s Kospi index shed 0.7 percent, and Australia’s S&P/ASX 200 tumbled 1.5 percent. The Shanghai CSeng Index was closed for a public holiday.

Markets in Singapore, Malaysia and Taiwan also fell. Hong Kong’s Hang yen in New York late Wednesday.

In currencies, the dollar fell to 87.25 yen from 88.36 omposite Index lost 1 percent to 2,373.79.

Benchmark crude for August delivery was down $1.02 to $74.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 31 cents to settle at $75.63 on Wednesday.