By Marc Jones
LONDON (Reuters) - Renewed concerns about the stability of China and other big emerging economies and related worries about commodity prices swept through global markets on Monday ahead of what should be telling economic data this week.
An 8.8 percent drop in Chinese industrial firms' profits and a 30 percent plunge miner Glencore's London-traded stocks triggered the latest round of jitters, sending copper, which had stabilised somewhat, back below $5,000 a tonne.
That in turn ripped into the metal's producer countries. Zambia, where Glencore plans to lay off 3,800 workers saw its currency, the kwacha and foreign currency bonds hit all time lows, while Chile's peso was left near its weakest in over 12 years.
Markets had already been in a cautious mood ahead of a week of key economic data including euro zone inflation on Wednesday, Chinese industrial and service sector PMIs on Thursday and U.S. jobs figures on Friday.
The nervy mood meant Wall Street was expected to fall roughly 1 percent when trading starts, with Europe's main bourses being pushed back hard by Glencore's woes and a fresh 7 hit for troubled Volkswagen.
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"The original catalyst was the industrial profits in China and we have heard the bearish news on Glencore and Anglo American, so all those factors are reinforcing the narrative that the Chinese economy and global economy is suffering a slowdown," said Michael Hewson at CMC Markets in London.
Spanish financial markets showed initial resilience after a victory by secessionists in Catalonia that was not seen as strong enough for them to push for independence for the region from Madrid, but eventually succumbed to the global malaise.
As well as data that may give a clearer reading of China's economic health, markets are awaiting Friday's U.S. non-farm payrolls release for insight on whether rates might still rise this year. Two weeks ago the U.S. Federal Reserve delayed a widely anticipated first move higher from crisis-era lows because of worries about China and volatility in markets.
With all that combined uncertainty checking risk appetite, the world's major currencies were beginning to pull around, with the dollar keeping the squeeze on the more strained of its emerging market counterparts.
"The tension will rise as we get towards Friday because it will have implications for what the Fed does and that is all anybody cares about at the moment," said David Bloom, an FX strategist at HSBC in London.
The dollar fetched 120.08 yen after edging up to a two-week high of 121.24 on Friday while the euro was down 0.3 percent at $1.1161 after shedding 0.3 percent overnight.
Several Fed officials are scheduled to speak this week, keeping the focus firmly on U.S. monetary policy after strong second quarter U.S. GDP data released on Friday had sharpened the case for a 2015 hike.
Wednesday's flash reading of annual euro zone inflation is another major release this week, with a Reuters poll forecasting a zero reading in September. A slip into negative inflation for the first time since March would fuel speculation about further European Central Bank stimulus, six months after the euro zone's central bank launched a massive asset-purchase programme.
COPPER PANNED
Commodities markets were equally gloomy, with U.S. crude oil futures losing 1.7 percent to $44.87 a barrel while Brent crude lost 1.66 percent to $47.84 a barrel.
Copper fell to within touching distance of last month's 6-1/2 year low, dropping 1.5 percent to $4,944 a tonne.
Gold slipped to $1,144.45 an ounce while platinum, which has been hammered by the Volkswagen emissions scandal as it is used in catalytic converters, also sagged back towards a 6-1/2-year low.
"The recoveries we've seen over the past couple of months, have been pretty short-lived," said strategist Daniel Hynes of ANZ in Sydney. "It highlights the increasing cautiousness around China's growth and what it means for copper despite what the supply side is doing. The PMI will be pretty key this week."
Emerging markets remained a key pressure point due to fears that U.S. interest rates could soon start heading higher even while global growth is lacklustre and commodities markets are being battered.
The Malaysian ringgit hit a 17-year low, dogged by concerns over the risk of more outflows from Malaysian bonds, while the general worries also weighed on Brazil's battered real, Indonesia's rupiah, the South African rand and the Turkish lira.
"Every single indicator we have had from emerging markets shows further weakness in economic activity," said Murat Toprak, a currency strategist at HSBC.
(Additional reporting by Shinichi Saoshiro in Tokyo and Claire Milhench in London; Editing by Catherine Evans)