World stocks extend retreat as growth worries resurge

Global stock markets extended their sell-off Wednesday as disappointing US jobs figures added to reignited concerns about weak growth.

After a run of gains for equities, traders have been spooked by a string of disappointing data from China to Europe and the United States that has led them to question whether hopes of a nascent recovery were overdone.

However the dollar has continued to recover from eight-month lows versus the euro on hints that the US Federal Reserve may still hike US interest rates in June, analysts said.

While this makes the US currency a more attractive investment, higher borrowing costs can weigh on economic growth.

The euro hit $1.1616 on Tuesday, the highest point since late August but was standing at $1.1495 in Wednesday deals.

"The US dollar index made a new low for the year yesterday, briefly recovering on the back of comments from the Fed's Dennis Lockhart that a hike in interest rates at the June... meeting is still on the cards," said Neil MacKinnon, economist at financial group VTB Capital.

Comments from Federal Reserve officials suggesting the US central bank could hike interest rates as soon as next month also provided support to the greenback against the yen after plummeting over the past month.

Across the Atlantic meanwhile, the European Union on Tuesday cut its eurozone growth forecasts for this year, warning that global risks including the slowdown in China and the danger of Britain leaving the EU were having a damaging effect.

The news was the latest of a flurry of data highlighting weaknesses in the global economy, including a shrinkage or slowdown of manufacturing activity in China, Britain and the United States.

"The market is extremely morose today in reaction to macro-economic data that are not as good as expected," said Michael Jacoby, head of continental European trading at Oddo Securities.

London's FTSE led Europe's main bourses into negative territory Wednesday, closing 1.2 percent lower, with Paris' CAC and the DAX in Frankfurt following closely behind.

Jasper Lawler, an analyst at CMC Markets, said the FTSE 100 had hit two-week lows amid concerns that slowing global growth could derail a nascent return in investor confidence.

"Stock markets have been falling in the past few days amid mixed corporate earnings but a return of US dollar strength in the past two days, if sustained, could add to downside risks," he cautioned.

Wall Street stocks slid as disappointing private-sector hiring figures for April added to worries the US economy is slowing.

Sheraz Mian, of Zacks Investment Research, said the jobs data was "the first weak showing on the labour market front, which, if confirmed by the Friday government jobs report, will represent a notable deterioration in the US economic outlook".

The mining sector, already under pressure from weak demand growth for metals, took another knock with BHP Billiton's share price plunging on news that Brazilian prosecutors had slapped it with a US$43-billion (37-billion-euro) lawsuit over November's deadly Samarco dam disaster.

BHP stock lost more than 9.0 percent in Sydney, while its London-listed shares were down 5.8 percent at 824.80 pence on London's FTSE 100.

Sydney's equity market meanwhile closed down 1.5 percent on Wednesday. Across Asia, Hong Kong lost 0.7 percent and Seoul shed 0.5 percent.

Shanghai flitted between gains and losses after Chinese authorities hinted at unveiling measures to support the country's stock markets. The city's benchmark index ended 0.1-percent lower.

Tokyo remained closed for a public holiday.

- Key figures around 1600 GMT -

London - FTSE 100: DOWN 1.2 percent to 6,112.02 points (close)

Frankfurt - DAX 30: DOWN 0.99 percent at 9,828.25 (close)

Paris - CAC 40: DOWN 1.1 percent at 4,324.23 (close)

EURO STOXX 50: DOWN 1.2 percent at 2,938.75

Hong Kong: DOWN 0.7 percent at 20,525.83 (close)

Shanghai: DOWN 0.1 percent at 2,991.27 (close)

Tokyo: Nikkei 225: Closed for public holiday

New York - Dow: DOWN 0.5 percent at 17,661.16

Euro/dollar: DOWN at $1.1495 from $1.1507 Tuesday

Dollar/yen: UP at 107.01 yen from 106.63 yen