Business News

Published: Thursday April 18, 2013 MYT 12:00:00 AM
Updated: Friday April 26, 2013 MYT 12:09:23 AM

Shares rebound, oil flat as growth worries linger

LONDON: European shares rebounded and oil steadied on Thursday as this week's brutal selloff, provoked by concerns about global economic growth, lured back some investors looking for bargains.

Jonathan Sudaria, a dealer at Capital Spreads, cited tentative bargain hunting. "But as yesterday's sudden sell-off showed, it doesn't take much to bring out the bears in this current environment," he said in a note.

Surprisingly weak economic data from China and the United States recently and the International Monetary Fund's decision to trim its global growth forecast have undermined confidence in the outlook for the world economy this year.

However, some analysts say the market move is more a timely correction after strong gains in the first quarter of the year, when optimism over the U.S. economy lifted Wall Street stocks to record peaks and boosted European shares to multi-year highs.

COMMODITIES SINK

The prospect of lower growth, especially in China, has continued to weigh on the commodity markets where copper and oil are near multi-month lows and gold is close to its weakest level for two years.

U.S. gold futures, which sometimes dictate spot gold prices, were at $1,377.40 an ounce, down about 0.4 percent, as holdings in the world's top gold-backed exchange-traded fund hit a three-year low.

Spot gold hit $1,339.86 an ounce, near Tuesday's two-year trough of $1,321.35 and is down about a quarter from last year's peak after shedding 18 percent so far this year.

However, the lower gold price was also expected to encourage demand from investors who want to hold the physical product rather than securities representing the metal.

"Investors, who value physical gold over paper gold, have viewed these low prices as a buying opportunity," said Edmund Moy, chief strategist at gold provider Morgan Gold, adding that sales of new gold coins from the U.S. Mint had jumped in April.

Copper, seen as a gauge for manufacturing and China-related growth, broke below $7,000 a ton for the first time since late 2011, with London copper futures sliding as much as 4 percent to $6,800 a ton.

"We're just seeing an ongoing adjustment to the weaker data seen earlier in the week ... What we're (also) seeing is a price adjustment to an emerging outlook that supply is increasing," said Ric Spooner, chief market analyst at CMC Markets.

In the debt market German Bund futures were steady, supported by expectations of loose central bank monetary policy, with the focus on Spanish and French debt auctions later in the day.

The Bund future was flat at 146.20, close to a high of 146.54 set at the start of the month. Demand was boosted on Wednesday by comments from European Central Bank policymaker Jens Weidmann, who stoked belief that interest rates could fall if economic data remains weak. - Reuters

Tags / Keywords: News, Business, European shares, oil, global economic growth, Business

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