GLOBAL MARKETS-Growth fears eclipse US earnings; Fed, Draghi eyed

Reuters - UK Focus

* Chinese inflation data hits stocks, outweighs Alcoa

earnings beat

* Bonds, currencies flat before Fed minutes, Draghi

By Jamie McGeever

LONDON, July 9 (Reuters) - World stocks fell on Wednesday as

cooling Chinese inflation overnight added to weak European

industrial data earlier in the week, pointing to slowing global

growth and eclipsing a positive start to the U.S. earnings

season.

Miner Alcoa Inc reported results after Wall Street

closed that beat analysts' expectations, but that was not enough

to help European equities recover after posting their biggest

fall in three months on Tuesday.

Major currencies and bond markets were steady ahead of two

potentially major monetary policy events later in the day. The

U.S. Federal Reserve will release minutes of its latest policy

meeting and European Central Bank President Mario Draghi is

scheduled to speak.

"You tend to get an up move after a good sell-off, but I'd

still be selling any strength on the stock markets for now,"

said Darren Courtney-Cook, head of trading at Central Markets

Investment Management.

The FTSEuroFirst 300 index of leading European shares was

down 0.1 percent at 1,362 points in early trade, while

Germany's DAX and France's CAC 40 were both flat at 9,779 points

and 4,345 points, respectively.

Britain's FTSE 100 was down a quarter of one percent at

6,721 points, dragged lower by the insurance sector.

Admiral Group (LSE: ADM.L - news) fell 6 percent after issuing a trading

statement update, and Aviva (Other OTC: AIVAF - news) was down 3 percent.

Earlier, MSCI (NYSE: MSCI - news) 's broadest index of Asia-Pacific shares

outside Japan fell 0.7 percent, touching its

lowest point in a week and pulling away from last week's

three-year highs. Japan's Nikkei stock average ended

down 0.1 percent.

Overnight, China's consumer price index rose 2.3 percent in

June from a year earlier, shy of the consensus forecast of 2.4

percent, and a sign economic activity may be cooling.

"The weaker CPI (Other OTC: CPICQ - news) reading ... provides further room for policy

easing in the future on the one hand, and also signals the weak

demand from the domestic economy on the other hand," said Wang

Jun, an economist at the China Centre for International Economic

Exchanges in Beijing.

DRAGHI RETURNS TO LONDON

In currency markets, China guided its yuan towards a

three-month high against the dollar in what traders said was

possibly a political move as China and the United States started

their annual Strategic and Economic Dialogue.

The euro and sterling were unchanged at $1.3615 and

$1.7121, respectively, while the dollar inched up against

the yen to 101.60 yen.

The dollar has this week fallen back below a key long-term

technical level against the yen. That's the 200-day moving

average, which on Wednesday was 101.83 yen, suggesting it may

not strengthen much - if at all - in the coming days and weeks.

Major bond markets were steady ahead of the Fed minutes and

Draghi's speech in London, where he delivered his famous speech

almost exactly two years ago pledging to do "whatever it takes"

to save the euro.

The benchmark 10-year Treasury yield stood at

2.575 percent in early European trade, up one basis point from

the U.S. close of 2.565 percent.

Upbeat June U.S. employment data last week has prompted some

Wall Street economists to predict the Fed will raise interest

rates earlier than previously thought. But yields have fallen

since then, with investors cautious about the strength of the

recovery.

Downbeat German economic data on Tuesday kept the benchmark

Bund yield anchored, and in early trade on Wednesday it touched

its lowest in a year at 1.218 percent.

Draghi takes the stage later in the day, and investors will

be looking for signs the ECB could take further easing steps to

support the euro zone economy.

In commodities trading, Brent oil fell 0.4 percent

to $108.53 per barrel. It has lost 3.5 percent so far this

month.

Gold rose 0.4 percent on the day to $1,324.00 an

ounce as markets waited for the Fed minutes.

(Reporting by Jamie McGeever, additional reporting by Sudip

Kar-Gupta in London and Aileen Wang in Beijing, editing by John

Stonestreet; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting;

for the MacroScope Blog click on http://blogs.reuters.com/macroscope;

for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)

View Comments (0)