World stocks slide on Wall St drop, Iraq violence

Associated Press

HONG KONG (AP) — European and Asian stock markets slumped Wednesday, a day after Wall Street suffered its biggest decline in two weeks and amid ongoing violence in Iraq.

Global investors took their lead from yesterday's performance on Wall Street, where U.S. blue-chip bank and energy stocks led a sell-off in the final hour of the trading session. A report that new U.S. home sales rose in May to the highest in six years helped homebuilders, but wasn't enough to lift the broader market.

Investors were also prompted to cash in their gains after fresh reports of violence in Iraq, including unconfirmed airstrikes by Syrian warplanes, that raised fears that the conflict could spiral into a broader regional conflict.

"Fresh geopolitical concerns in Iraq may have given investors the perfect excuse to take profits off the table," said Desmond Chua, market analyst at CMC Markets in Singapore.

Two U.S. economic reports on Wednesday failed to improve sentiment. One showed the world's largest economy shrank by more than expected in the first quarter while another showed orders for long-lasting goods sank in May.

In Europe, France's CAC 40 fell 1.3 percent to 4,460.60 while Germany's DAX dropped 0.7 percent to 9,867.75. The FTSE 100 index of leading British companies lost 0.8 percent to 6,733.62.

U.S. stocks recovered their poise after the previous day's losses. The Dow was up 0.2 percent at 16,850.93 while the broader S&P 500 rose by the same rate to 1,954.65.

Earlier, in Asia, Japan's Nikkei 225 slipped 0.7 percent to close at 15,266.61 while South Korea's Kospi dropped 0.6 percent to end at 1,981.77.

Hong Kong's Hang Seng wavered beween gains and losses before closing less than 0.1 percent lower at 22,866.70 while in mainland China the Shanghai Composite Index lost 0.4 percent to 2,025.50. Australia's S&P/ASX 200 fell 0.6 percent to 5,402.00.

In energy trading, the price of U.S. benchmark crude for August delivery rose 12 cents to $106.15 per barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 14 cents to $106.17 on Tuesday.

In currencies, the dollar slipped to 101.75 Japanese yen from 101.94 in late trading Monday. The euro rose to $1.3635 from $1.3604.

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