Global stocks skittish after growth downgrade

Associated Press

MUMBAI, India (AP) — Stock markets turned skittish on Wednesday after the World Bank lowered its global growth forecast and a militant takeover of a key Iraqi city pushed oil prices higher.

The World Bank cut its 2014 growth forecast to 2.8 percent from 3.2 percent, citing a bitter American winter and the political crisis in Ukraine. But losses in markets were contained by recent data such as solid U.S. hiring and stronger Chinese exports in May that suggest prospects for growth in the second half of the year aren't entirely pessimistic.

Germany's DAX dropped 0.6 percent to 9,969.79 and the CAC 40 in France fell 0.7 percent to 4,563.05. Britain's FTSE 100 shed 0.5 percent to 6,839.14.

Futures augured losses on Wall Street after a run of record highs. Dow Jones futures fell 0.3 percent to 16,894 and S&P 500 futures were down 0.4 percent to 1,943.80

Oil prices rose ahead of an OPEC meeting in Europe that is expected to keep production levels steady for the year. Benchmark U.S. oil for July delivery was up 30 cents to $104.65 a barrel in electronic trading on the New York Mercantile Exchange, extending Tuesday's large gain.

Energy markets were also affected by al-Qaida-inspired militants overrunning much of the Iraqi city of Mosul on Tuesday. Mosul lies in an area that is a major gateway for Iraqi oil.

Despite the general market jitters, IG Group analyst Ryan Huang said the general trend for growth is positive after the European Central Bank announced additional monetary stimulus.

"Last week's monetary policy decision by the ECB to cut rates should also set the eurozone on course for recovery and help developing countries as a market for their exports," Hwang said in a market commentary. "That will be a further boost for China."

In Asia, Hong Kong's Hang Seng closed down 0.3 percent at 23,257.29 and Australia's S&P/ASX 200 dropped 0.3 percent to 5,454. Seoul's Kopsi inched up 0.1 percent to 2,014.67 and China's Shanghai Composite posted equally anemic gains, rising 0.1 percent to 2,054.95.

Japan's Nikkei 225 ended its session in positive territory, up 0.5 percent to 15,069.48, helped by indications that a downturn from a sales tax hike instituted in April might not be as severe as originally expected.

In currency trading, the dollar fell to 102.06 yen from 102.33 late Tuesday. The euro slipped to $1.3534 from $1.3544.

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