Global stocks drop on Turkey; strong dollar dents commodities

NEW YORK: Global stocks fell Wednesday as investors fled riskier assets amid renewed worries over Turkey while a stronger dollar weighed on oil and other commodities.

Bourses were broadly lower across Asia, Europe and the Americas, with some analysts also citing worries about China following weak economic data and earnings.

"It's a broad based sell-off across Europe as dealers are worried about the currency crisis in Turkey, and the cooling of Chinese growth," said market analyst David Madden at CMC Markets UK.

London finished the day down 1.5 percent, with Frankfurt shedding 1.6 percent and Paris falling 1.8 percent

Wall Street stocks also retreated, although leading indices finished above their session lows. The S&P 500 ended down 0.8 percent.

Turkey on Wednesday said it was hiking tariffs on imports of several key US products in retaliation for Washington's sanctions against Ankara, as the bitter dispute between the two allies that has battered the Turkish lira showed no sign of ending.

Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, said the Turkey crisis was likely to go on for some time.

"It is hard not to see the lira remaining under pressure until we see a material fiscal restraint to cool down the (Turkish) economy, along with a measurable lift in rates by the central bank and a diplomatic resolution to US tensions," he said.

Traders fret that Turkey's woes could spark contagion into other emerging currencies and that banks in advanced nations could suffer due to exposure to the Turkish economy.

Jack Ablin of Cresset Wealth Advisors said selling in stocks and buying of "safe" assets like the dollar and yen suggested a "general risk aversion" among investors.

The dollar was further boosted by strong US retail sales data, which dragged on shares of US exporters, said Shawn Cruz, manager of trader strategy, TD Ameritrade.

"It certainly bodes well for the US consumer" but a "lot of movement into the dollar is maybe what clipped US equities," Cruz said.

The strong greenback also weighed on oil, copper and other commodities that trade in the US currency. And oil was pressured by a large build in US inventories instead of the drop in supplies expected by analysts.

Cruz said disappointing earnings from China's Tencent was a factor in the losses in the Shanghai index and the tech-rich Nasdaq, which dropped more than the other major US indices.

Tencent's results were hit by an apparent decision by Chinese authorities to halt approvals of any new mobile games.

- Key figures around 2030 GMT -

Euro/dollar: UP at $1.1349 from $1.1344 at 2100 GMT

Pound/dollar: DOWN at $1.2700 rom $1.2723

Dollar/yen: DOWN at 110.73 from 111.15 yen

New York - Dow Jones: DOWN 0.5 percent at 25,162.41 (close)

New York - S&P 500: DOWN 0.8 percent at 2,818.37 (close)

New York - Nasdaq: DOWN 1.2 percent at 7,774.12 (close)

London - FTSE 100: DOWN 1.5 percent at 7,497.87 (close)

Frankfurt - DAX 30: DOWN 1.6 percent at 12,163.01 (close)

Paris - CAC 40: DOWN 1.8 percent at 5,305.22 (close)

EURO STOXX 50: DOWN 1.7 percent at 3,350.31 (close)

Tokyo - Nikkei 225: DOWN 0.7 percent at 22,204.22 (close)

Hong Kong - Hang Seng: DOWN 1.6 percent at 27,323.59 (close)

Shanghai - Composite: DOWN 2.1 percent at 2,723.26 (close)

Oil - Brent Crude: DOWN $1.70 at $70.76 per barrel

Oil - West Texas Intermediate: DOWN $2.03 at $65.01 per barrel