NEW YORK: Stocks on major world markets and the US dollar fell on Thursday as Greece's debt problem, Chinese inflation and disappointing US jobs data stoked worries over a global economic slowdown.
Bonds and gold rose as uneasy investors sought safehaven from stocks and riskier investments.
"We do have to scale back growth expectations. The market is more concerned about what growth will be like with rising input costs," said Jerry Webman, senior investment officer and chief economist at OppenheimerFunds in New York. "People are looking at 'risk-off' trades."
US oil prices climbed on the weaker dollar.
World stocks, as measured by the MSCI world index shed 0.3 percent despite a burst of corporate activity that would usually lift investors' spirits. On a year-to-date basis, the index was still up 4.1 percent.
While investors fret over a global slowdown, economists in the latest Reuters poll predicted that world growth of 4.2 percent this year and 4.3 percent in 2012, unchanged since the January poll.
European stocks fell 0.6 percent on the day, while Wall Street stocks were down 0.2 percent.
Investors, despite their reservations about the global economy, snapped up shares of Zipcar Inc. in its debut on Nasdaq. Shares of the US car-sharing company rose more 50 percent at $27.83.
In Tokyo, the Nikkei closed up 0.1 percent after Wednesday's late gains in the US
Selling in European stocks emerged on a report that Chinese inflation would re-accelerate after slowing recently. Investors are particularly concerned about Chinese inflation in case the government attempts to restrain it by raising interest rates prompts a 'hard landing' for the economy.
"In emerging markets especially China, they rely on high levels of oil imports. They import a lot of oil products into the manufacturing sector," said Chris Ferrarone, global equity strategist with UBS in Stamford, Connecticut.
Hong Kong's Phoenix TV, citing an unnamed source, said China's annual rate of inflation in March was likely to be 5.3 percent to 5.4 percent, a 32-month high and just above an estimate in a Reuters poll.
Stunning huge figures on China's foreign exchange reserves and money supply growth also fanned worries how aggressively Beijing will confront inflation.
PERIPHERAL WORRIES
Stock losses grew as Greek bond yields soared, with short-dated paper coming under the most intense pressure, as markets priced in a greater probability that Athens would be forced to restructure its runaway debt.
Yields of other peripheral euro zone states also rose sharply.
A year ago, the deterioration of Europe's sovereign debt problem held back the global recovery and forced the European Central Bank to leave policy rates steady for longer.
Adding to jitters over the bailout cost in Europe was the toll on Japan from last month's deadly quake and tsunamis.
The Reuters Tankan survey of 400 large firms found on Thursday that power shortages caused by the crippled Fukushima nuclear plant had hit nearly 60 percent of local companies, disrupting production and supply chains.
In the US, the surprise rise in jobless claims raised doubts over the recovery in the labor market.
Renewed anxiety over the US economy hurt the dollar. The ICE US dollar index was down 0.4 percent and touched a 16-month low.
The weaker dollar supported oil value, despite worries over less demand if the world economy slows.
US oil prices were up 82 cents near $108 a barrel. But in London, Brent crude was stuck in the red, down 41 cents at $122.46.
Gold prices jumped to $1,471.10 an ounce from $1,454.61 late on Wednesday.
In bond trading, US Treasury prices were steady after strong demand at $13 billion auction of 30-year bonds. The benchmark 10-year yield last traded at 3.47 percent after touching its lowest level in about 1-1/2 weeks earlier.
German Bund futures were up 0.2 percent at 120.67, the highest in more than a week.
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