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China economy fears continue to drive markets

  • Article by: PAN PYLAS
  • Associated Press
  • March 14, 2014 - 2:49 PM

LONDON — Concerns over the Chinese economy and the ongoing tensions in Ukraine continued to drive stock markets around the world lower Friday.

The twin worries have had a firm grip over financial markets all week, especially as there's been a relative dearth of market-moving economic news in the U.S. and Europe.

With traders monitoring discussions Friday between U.S. Secretary of State John Kerry and Russia Foreign Minister Sergei Lavrov in the run-up to Sunday's referendum in the Ukraine region of Crimea over joining Russia, analysts said there's unlikely to be a turnaround in sentiment.

"At the end of the week, investors will likely want to sit on their hands and monitor the outcome of U.S.-Russian talks on the Ukraine today and the outcome and aftermath of the Crimean referendum," said Neil MacKinnon, global macro strategist at VTB Capital.

In Europe, the FTSE 100 index of leading British shares fell 0.4 percent to close at 6,527.89 while the CAC-40 in France shed 0.8 percent to 4,216.37. Germany's DAX staged a late recovery to close 0.4 percent higher at 9,056.41.

Russia's main index, the RTS, fell 1.4 percent amid concerns about the potential impact of sanctions against the country because of its involvement in Ukraine.

In the U.S., stocks were steady after the previous day's big losses — the Dow Jones industrial average was up 0.1 percent at 16,126 while the broader S&P 500 index rose the same rate to 1,848.76.

"With a host of geopolitical considerations to be made, there's still scope for more selling into the weekend break," said Patrick Latchford at Valutrades.

Earlier, Asian stocks had a torrid session. China has been the main driver in markets there this week as investors have grown increasingly cautious about the outlook for the world's No. 2 economy following a raft of disappointing economic news.

Japan's Nikkei 225 stock had a particularly bad session, falling 3.3 percent to 14,327.66. As a result, the index ended the week 6.2 percent lower.

As well as fretting over the fallout from China, Japanese investors have been responding to the recent rise in the value of the yen in light of its status as a safe haven asset in times of market stress. The appreciating yen can make the country's exports less competitive in export markets.

The dollar was down a further 0.4 percent at 101.47 yen. At the start of the week, the dollar was trading above the 103 yen mark.

Elsewhere in Asia, Hong Kong's Hang Seng dropped 1 percent to end at 21,539.49 and China's Shanghai Composite fell 0.5 percent to 2,004.34.

© 2014 Star Tribune