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Top News

Global stocks slide to close dim quarter

NEW YORK : Global stocks were set to close their worst quarter in nearly three years on a negative note on Friday, weigh
Published September 30, 2011

comNEW YORK: Global stocks were set to close their worst quarter in nearly three years on a negative note on Friday, weighed by lagging concern about the world economy and the long-standing sovereign debt crisis in Europe.

The euro and most commodity prices also fell, with investors' search for relative safety evidenced in gains in US government bonds and the US dollar.

Adding to a string of global data that has crushed growth-related assets in the past three months, China's factory sector eased for a third consecutive month in September, suggesting that the world's second-largest economy is not immune to global headwinds.

US stocks opened lower, putting the benchmark S&P 500 on course for a gloomy close to its worst quarter since the collapse of Lehman Brothers in 2008.

An index of global stocks tumbled 17 percent in the last quarter, while US crude prices oil fell more than 15 percent and copper, a proxy for growth expectations, slumped 25 percent in the same period.

"China might be having some kind of pullback, and in Europe we don't know how we'll swing with the sovereign debt issue," said Jeffrey Friedman, senior market strategist at MF Global in Chicago.

"There are concerns of a global slowdown, and we don't have any data to suggest we won't have a double-dip (recession). We won't be out of this trading range for a while."

Through Thursday's close, the MSCI All Country World Index lost about $4.7 trillion in market capitalization, according to Thomson Reuters Datastream.

In morning trading in New York, the Dow Jones industrial average was down 71.56 points, or 0.64 percent, at 11,082.42. The Standard & Poor's 500 Index fell 11.47 points, or 0.99 percent, at 1,148.93. The Nasdaq Composite Index lost 24.12 points, or 0.97 percent, at 2,456.64.

European shares were down 1.8 percent for the day, also on track to mark their biggest quarterly loss since the three last months of 2008.

The euro slipped versus the US dollar and was on course for its biggest monthly drop in nearly a year, weighed down by the lack of visible solution to the euro zone's deepening debt troubles.

The single currency fell to lows at $1.3418 and was last at $1.3424, down 1.3 percent. For the month of September, the euro dropped 6.6 percent, its weakest performance since November 2010.

A gauge of the US dollar against major currencies rose 0.7 percent.

A boost to the euro on Thursday generated by Germany's parliamentary approval for new powers to the euro zone bailout fund, known as EFSF, proved fleeting after data showing German retail sales slumped at their fastest pace in more than four years in August.

Leaders in Germany's ruling coalition said they opposed moves to increase states' liabilities to the euro zone's rescue fund, keeping alive concerns that Europe will be not able to do enough to prevent the crisis from spreading.

"The combination of sovereign debt crisis, a slowing economy and really what appears to be ineffective leadership in Europe has led to this decline and we expect that to continue to play out in the fourth quarter," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The deepening economic gloom has prompted investors to slash bets on risky assets in the quarter ending September.

The retreat pushed safe-haven US Treasury prices higher on Friday, with benchmark 10-year notes last up 18/32 in price to yield 1.938 percent, down from 2.00 percent late on Thursday. Thirty-year bonds jumped 1-28/32 in price to yield 2.965 percent, down from 3.06 percent.

Copyright Reuters, 2011

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