Global growth worries hit shares

The euro steadied near a two-year low and European shares fell on Thursday as concern over the global growth outlook sapped investor appetite for risk assets already hit by a lack of clear clues on possible US stimulus measures.

A surprise rate cut in South Korea, a 50-basis point cut in Brazil to a record low and a lack of any clear policy action by the Bank of Japan added to the cautious mood, favouring the dollar and safe-haven assets.

A bull and a bear styrofoam figurine. Credit: REUTERS

“There is not much to expect from economic data, there is not much to expect from earnings, so the only thing markets hope for is more quantitative easing, more stimulus from Europe - more stimulus from everywhere,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.

The greenback measured against a basket of key currencies , rose to a two-year high of 83.61 in overnight trade before settling around 83.49 in early European activity, pushing the euro to near a two-year low of $1.2234.

The dollar had gained after the minutes of last month's Federal Reserve meeting, published on Wednesday, showed the world's biggest economy would have to weaken further before its central bank took any more easing steps. However, the minutes showed some officials favoured more stimulus.

A weak session in Asian share markets on Thursday left the MSCI world equity index lower for its seventh straight session, down 0.4 percent at 306.91 points.

The FTSE Eurofirst 300 index of top European shares weakened 0.8 percent to 1,031.11 in early trade, having closed flat on Wednesday.

In debt markets investors were watching the sale by Italy of 7.5 billion euros ($9.2 billion) of 12-month bills, which precedes a 5.25-billion euro longer-term bond sale on Friday, as yields on Italian and Spanish debt gradually ease. - Reuters