World stocks down again as US growth worries linger despite modest retail sales increase

World stocks down as US growth worries linger

LONDON — European and U.S. markets traded modestly lower Friday after a modest increase in U.S. retail sales did little to lift hopes about the global economic outlook.

In Europe, Germany’s DAX was down 27.65 points, or 0.5 percent, at 6,107.52 while France’s CAC-40 fell 5.16 points, or 0.1 percent, to 3,615.92. The FTSE 100 index of leading British shares was up 3.89 points, or 0.1 percent, at 5,269.95.

On Wall Street, the Dow Jones industrial average was down 20.74 points, or 0.2 percent, at 10,299.21 soon after the open while the broader Standard & Poor’s 500 index fell 2.46 points, or 0.2 percent, to 1,081.15.

The falls came despite the news that the eurozone economy grew by a quarterly rate of 1 percent in the second quarter of the year and that U.S. consumer spending held up during July — the Commerce Department reported that retail sales rose 0.4 percent during July, in line with market expectations.

That level of retail spending is not going to do much to lift U.S. economic growth forecasts or get the unemployment rate down from around 10 percent.

Analysts said the details of the U.S. sales report proved weaker than the headline numbers suggested as the rise was largely dependent on the sale of cars. Overall, he said consumers in the world’s largest economy remain constrained by high unemployment levels and waning confidence about the outlook.

U.S. retail sales are particularly important because they shine a light on the state of private consumption, a key driver of growth — it accounts for around 70 percent of the world’s largest economy. The consensus in the markets is that they rose a monthly 0.4 percent.

The rise in July also appears less marked given the 0.3 percent monthly increase in consumer prices, which was released at the same time.

“Today’s news caps off a bad week for the U.S. in terms of economic data,” said Owen James, an analyst at the Centre for Economic and Business Research.

It’s been a very volatile week for stock markets as fears about the global economic recovery have mounted following a warning from the Fed that the U.S. economy is slowing down. There’s also increasing evidence that China will not be able to pick up the slack from lower U.S. growth.

One bright spot was the news that the 16 countries that use the euro saw economic output rise by a whopping 1 percent in the second quarter, on the back of a huge 2.2 percent expansion in Germany.

Analysts said the figures were impressive but were backward-looking. Since the second quarter of the year ended, the main concern in markets is that the global economic recovery is being threatened by a slowdown in the U.S.

Those fears have had a major impact in the currency markets and the dollar has been the main beneficiary, as it garners support from its status as a safe haven asset. The Japanese yen is also widely considered a safe haven.

By mid afternoon London time, the euro was flat at $1.2814, around five cents below where it was earlier this week. The dollar was steady at 85.80 yen — on Wednesday the dollar had fallen to a 15-year low of 84.75 yen.

The yen’s recent strength has hit Japanese share prices hard as investors fret about the potential negative impact on exporters.

On Friday, the Nikkei 225 stock average added 0.4 percent to 9,253.46 but the Hang Seng index shed 0.2 percent to 21,071.57 after a day of back and forth trade.

Elsewhere in Asia, South Korea’s Kospi gained 1.4 percent to 1,746.24 and the Shanghai Composite index rose 1.2 percent to 2,606.70. An advance in metals prices triggered buying in miners, which helped push Australia’s S&P/ASX 200 up 1.3 percent to 4,459.60. BHP Billiton Ltd. jumped nearly 2 percent.

Benchmark crude for September delivery was up 20 cents at $75.94 a barrel in electronic trading on the New York Mercantile Exchange. The contract slid $2.28 to settle at $75.74 on Thursday.