World stocks slip on growth forecast downgrade

Associated Press

LONDON (AP) — Stock markets turned skittish on Wednesday after the World Bank lowered its global growth forecast.

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.

"Global financial markets are struggling midweek in the face of a growth downgrade from the World Bank as risks refuse to moderate," said Andrew Wilkinson, chief market analyst at Interactive Brokers. "Be it slowdown in China's real estate markets, instability in the Ukraine or fallout from gradually tighter monetary policy over time, threats to the health of emerging markets continue to haunt the outlook."

In Europe, Germany's DAX closed down 0.8 percent at 9,949.81 while the CAC 40 in France fell 0.9 percent to 4,555.11. Britain's FTSE 100 shed 0.5 percent to 6,838.87.

In the U.S., stocks struggled after a run of record highs — the Dow Jones industrial average was down 0.5 percent at 16,865 while the broader S&P 500 index fell 0.3 percent to 1,945.80.

Oil prices were in focus Wednesday as OPEC countries agreed to keep unchanged their output target of 30 million barrels a day. Traders also kept watch on developments in Iraq, a day after al-Qaida-inspired militants overrun the city of Mosul, which lies in an area that is a major gateway for Iraqi oil. Benchmark U.S. oil for July delivery was up 25 cents to $104.60 a barrel in electronic trading on the New York Mercantile Exchange, extending Tuesday's large gain.

Earlier in Asia, Hong Kong's Hang Seng closed down 0.3 percent at 23,257.29 while Seoul's Kospi inched up 0.1 percent to 2,014.67. 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.

Among currencies, the euro was down 0.1 percent at $1.3533 while the dollar fell 0.4 percent to 101.89 yen.

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