Monday, October 08 17:17:02
U.S. and European stocks fell today after the World Bank cut its growth forecast for China, emphasising concerns about the strength of the global economy.
Jitters about the euro zone debt crisis knocked the euro down from two-week highs as euro zone officials gathered to launch the region's bailout fund.
The downward revision from the World Bank, which cut its growth expectations for the East Asia and Pacific region, added to the cautious tone in stocks heading into corporate earnings season, which starts in the United States on Tuesday.
Recent warnings from large multinationals such as FedEx Corp , Hewlett-Packard Co and Caterpillar Inc have already made investors wary.
"There is just a lot of uncertainty out there, so any little thing right now tends to be a bit of a drag. Some of it is China, some of it may be concerns about Europe again," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
The World Bank said there was a risk the slowdown in China could worsen and last longer than many analysts have forecast. Still, the international lender expects China to have a soft landing as seen from the bank's revised 7.7 percent growth forecast for this year and 8.1 percent for next year.
The World Bank earlier this year had forecast 8.2 percent GDP growth for China in 2012 and 8.6 percent in 2013.
Wall Street was modestly lower in late morning trading, while European shares were down 0.9 percent. World shares as measured by the MSCI world equity index were down 0.8 percent. The Dow Jones industrial average slipped 35.37 points, or 0.26 percent, to 13,574.78. The Standard and Poor's 500 Index was down 6.34 points, or 0.43 percent, at 1,454.59. The Nasdaq Composite Index lost 24.37 points, or 0.78 percent, to 3,111.81.
The announcement from the World Bank deflated some of last week's positive sentiment in the markets spurred by an unexpected drop in the U.S. unemployment rate. (C ) Reuters