LONDON: European stock markets fell yesterday and gold plunged to a two-year low on news that the powerful Chinese economy slowed unexpectedly in the first quarter of the year, dealers said.
London’s FTSE 100 index of top companies lost 0.64 percent to 6,343.60 points, Frankfurt’s DAX 30 was off by 0.41 percent at 7,712.63 points and in Paris the CAC 40 was down by 0.50 percent at 3,710.48 points.
On the London Bullion Market, gold prices slumped to $1,355.79 per ounce in afternoon exchanges — the lowest level since February 14, 2011 — but later edged back up to $1,395. That compared with $1,535.50 recorded late on Friday. Silver recoiled $23.02 per ounce — hitting a low point last witnessed in October 2010.
In New York, US stocks also retreated on the Chinese economic report. The Dow Jones Industrial Average dropped 0.91 percent to 14,730.15 points in midday trade, while the broad-based S&P 500 fell 1.08 percent to 1,571.72, and the tech-rich Nasdaq Composite Index slumped by 1.33 percent to 3,250.98 points.
China said its economy grew 7.7 percent in the first quarter of this year, well below the 8.0 percent forecast in a poll of 12 economists done by AFP and worse than the 7.9 percent level seen over the the previous three months. The news raised questions about the fundamentals of global growth, analysts said.
“Global growth concerns intensified further overnight by the release of the weaker-than-expected Chinese real GDP (gross domestic product) report,” Bank of Tokyo-Mitsubishi economist Lee Hardman commented.
Mike McCudden at the online brokerage Interactive Investor added that “with the recent run or weaker global economic data investors have reached an impasse, and without a great deal in sight this week to inspire them, we should see markets drift lower. Ongoing eurozone concerns will not help.” The data sparked a sell-off of mining stocks in Europe on Monday because China is a major consumer of raw materials.
Gold had already fallen below $1,500 per ounce late on Friday, hit by fears that the US Federal Reserve could rein in its stimulus plans, and on news that crisis-hit Cyprus might sell reserves as part of its bailout programme.
In earlier trade, Asian markets also slipped. Tokyo stocks fell 1.55 percent as a pick-up in the yen also dampened sentiment. Hong Kong shed 1.43 percent and Shanghai was down by 1.13 percent, while Sydney declined by 0.91 percent and Seoul nudged 0.20 percent lower. In foreign exchange activity, the euro eased to $1.3081 in London, from $1.3106 late on Friday in New York.
AFP
