Stocks Fall as U.S., China Data Fuel Growth Concern; Oil Drops

Global stocks declined, with gauges of Japanese and Chinese equities falling more than 20 percent below their peaks after data from the U.S. and China added to evidence of a global economic slowdown. Oil tumbled and the dollar strengthened.

The MSCI All-Country-World Index lost 0.5 percent as of 8:02 a.m. in London and Euro Stoxx 50 Index slid 0.6 percent after entering a so-called bear market on June 1. Japan’s Topix Index slid 1.9 percent, the lowest close since Dec. 13, 1983, and Hong Kong’s Hang Seng China Enterprises Index dropped 2.8 percent. The Standard & Poor’s 500 Index futures slipped 0.5 percent, oil retreated to an eight-month low and the dollar rose against most major currencies.

“People are more concerned about a return of their capital as opposed to a return on their capital,” said Nick Maroutsos who oversees about $2.9 billion as managing director and co- founder of Sydney-based Kapstream Capital. “The recovery is still going to continue to have fits and starts. We need something more substantial that’s going to get investors back into the market. Until we get that, we’re not going to see risk assets perform well.”

China’s non-manufacturing purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. U.S. unemployment rose to 8.2 percent in May and payrolls increased less than the most-pessimistic forecast in a Bloomberg News survey of economists, Labor Department figures showed June 1. European leaders remain divided on solutions for the region’s debt crisis.

Dollar Strengthens

The greenback advanced against 14 of its 16 major peers, with the Australian dollar leading declines, down 0.4 percent to 96.65 U.S. cents. The euro slid 0.2 percent to $1.2414.

Australian bonds climbed, with yields on maturities of one year or longer falling to record lows. Australian three-year yields declined as much as 14 basis points to a record 1.89 percent. The one-year-rate touched 2.338 percent. Yields on Japan’s benchmark 10-year securities fell to 0.79 percent, the least since June 2003.

Australian corporate bond risk surged to the highest level since November, according to traders of credit-default swaps, with the Markit iTraxx Australia index jumping 9 basis points to 211, according to Westpac Banking Corp. The gauge of default swap contracts on 25 companies was set for the highest close since Nov. 29.

The MSCI Asia-Pacific Index dropped as much as 2.4 percent to the lowest level since October, with 15 shares falling for each that rose. Sony Corp. (6758) dropped below 1,000 yen in Tokyo trading for the first time since 1980, when the Walkman was introduced in the U.S. The shares fell as much as 2.3 percent to 990 yen on the Tokyo Stock Exchange.

Oil, Copper

“There’s a lot of psychological pressure among investors with the weak non-manufacturing data in China and global issues such as U.S. data and the euro crisis dragging on stocks,” said Tang Yonggang, an analyst at Hongyuan Securities Co. in Beijing.

Oil for July delivery lost as much as 2.1 percent to $81.50 a barrel in electronic trading on the New York Mercantile Exchange, the lowest close since October. Copper futures for July delivery fell 1.8 percent to $3.2590 a pound on the Comex in New York. The London Metal Exchange is closed today for a public holiday.

To contact the reporters on this story: Mariko Ishikawa in Tokyo at; Adam Haigh in Sydney at

To contact the editors responsible for this story: Alexander Kwiatkowski at; Nick Gentle at

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