By Lionel Laurent
LONDON (Reuters) - Global equities lost ground on Friday as traders grappled with an outage of Bloomberg financial terminals and fears of a regulatory clampdown on trading in China.
Worries that Greece may run out of money as debt repayments loom also spread through credit markets, with peripheral eurozone government debt rising while core German bund yields hit a new record low.
Top European shares were down more than 1 percent, U.S. equity futures fell 0.7 percent and China H-Share index futures were down more than 5 percent at 1107 GMT, with traders saying the market sell-off was worsened by the expiry of futures and options on European indexes.
Traders said markets were spooked by reports of a crackdown in China on over-the-counter margin trading and regulatory allowances for fund managers to lend shares for short-selling, saying this would be negative for the flow of recent money that has poured into Chinese exchanges.
"The securities regulator is encouraging short-selling to institutional investors, and they are going to stop margin trading on OTC," Ioan Smith, managing director of KCG Europe, said.
Also Read
"Traders had to catch up with that news after the Bloomberg terminals came back online, and that's when we saw the falls in Europe."
However, the MSCI All-Countries index is still set for a 0.4 percent gain for the week, on track for its third consecutive weekly gain, as cheap central bank cash buoys markets.
A U.S. interest rate hike in the near term is now seen as less likely after a recent run of lackluster U.S. economic data that sent the dollar down for a fourth straight day on Friday to near a one-week low.
At the same time, lingering worries about upcoming corporate earnings reports in the United States have been offset by corporate share buybacks, according to analysts and investors.
"The equity market does appear to have looked through the weakness in economic data and earnings with extraordinary aplomb," said Sean Darby, global equity strategist at Jefferies, in a note to clients.
"(U.S.) share buybacks have become a much more important driver for stock prices in the short-run as earnings-per-share growth wanes."
General Electric posted a first-quarter net loss of $13.6 billion, weighed down by about $16 billion in charges tied to its exit of GE Capital assets. Excluding special items, GE posted earnings of 31 cents per share, topping by 1 cent the average analyst estimate, according to Thomson Reuters I/B/E/S.
U.S. consumer inflation data is also due, and may reinforce the view that a near-term rise in rates is less likely.
German 10-year yields hit a new all-time low of 0.05 percent, creeping closer to zero, as Greece sounded a mix of defiance and willingness to compromise with its international creditors on reforms required to unlock more loans. Spanish, Italian and Portuguese yields rose.
Emerging market stocks hit a new seven-month high and headed for their third consecutive weekly gain, helped by expectations that a U.S. rate hike was further away than once thought.
Atlanta Federal Reserve Bank President Dennis Lockhart, a voting member of the Fed's rate-setting committee this year, said the recent "murky" run of U.S. data has him leaning against a June interest rate hike. Lockhart quickly added he was confident the economy would remain on track.
Comments from Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren also struck dovish tones.
The rate-rise uncertainty left gold prices facing their second straight weekly drop, while London tin capitulated to more than five-year lows as growing supply from Myanmar and torpid demand punished prices.
Brent crude oil prices fell on Friday, ending a run of rallies earlier in the week, after OPEC said that its output surged in March, adding to a global glut.
(Reporting by Lionel Laurent; Additional reporting by Alistair Smout, Francesco Canepa, Jemima Kelly, John Geddie and Christopher Vellacott; Editing by Mark Trevelyan and Keith Weir)