World stocks, copper, oil dip after weak China export data

By Caroline Valetkevitch

NEW YORK (Reuters) - Global stock indexes slipped and the prices of copper and oil sank on Monday after surprisingly weak Chinese trade data added to worries about a slowdown in the world's second-largest economy.

China's exports unexpectedly tumbled in February, falling 18.1 percent from a year earlier and swinging the trade balance into deficit. The data underscored recent concerns about the outlook for China's economy, even though the Lunar New Year holidays were blamed for the slide.

The data put a dampener on risk sentiment, which had been boosted briefly by Friday's stronger-than-expected U.S. non-farm payrolls report.

"The weak China trade balance data caused some flight to quality on less optimism about the global economy," said Jeffrey Young, interest rate strategist at Nomura in New York.

 

Prices on benchmark 10-year U.S. Treasuries were last up 3/32 to yield 2.78 percent. The Chinese data also provided some support to gold.

Chinese gloom added to strain in emerging markets, compounding worries the U.S. Federal Reserve's reduction in stimulus will greatly curb the flow of money.

The data hit commodity-sensitive Australian and Canadian dollars, both losing as much as half a percent against the greenback in the wake of the exports plunge.

Tensions between Russia and Ukraine added to investor unease. In Crimea, unidentified armed men fired in the air as they moved into a Ukrainian naval post in the latest confrontation since Russian military groups seized control of the Black Sea peninsula.

Russia said the United States had spurned an invitation to hold new talks on resolving the crisis.

In the U.S. stock market, the Dow Jones industrial average fell 34.04 points or 0.21 percent, to 16,418.68, the S&P 500 <.SPX> lost 0.87 points or 0.05 percent, to 1,877.17 and the Nasdaq Composite dropped 1.775 points or 0.04 percent, to 4,334.448.

Shares of Freeport McMoRan Copper & Gold lost 2.5 percent to $31.38 as the China data sent London copper to an eight-month low. The S&P materials index <.SPLRCM> lost 0.1 percent.

European shares, as measured by the pan-European FTSEurofirst 300 index <.FTEU3>, closed down 0.5 percent, hit by declines in shares of mining companies sensitive to China's ferocious appetite for raw materials. A global stock index <.MIWD00000PUS> was down 0.4 percent and an emerging market stock index <.MSCIEF> was down 1.2 percent.

German steel maker ThyssenKrupp , down 3 percent, was among the top losers in Europe as Chinese steel and iron ore futures slumped to their lowest levels ever on concerns about a slowdown in the world's top commodity buyer.

"Any poor news from China is always going to hit short-term market sentiment, especially in the mining sector, and fears of slower growth will hit base metals," said IPR Capital director Steven Mayne.

On Wall Street, Boeing Co shares lost 1.3 percent to $126.89 and were the biggest drag on the Dow and S&P 500, after the plane maker said late Friday that "hairline cracks" had been discovered in the wings of about 40 787 Dreamliners that are in production, another setback for the company's newest jet.

Separately, the disappearance of a Malaysian jetliner, a Boeing 777-200ER, is an "unprecedented aviation mystery," a senior official said on Monday.

Shares of Freescale Semiconductor were down 1.3 percent at $23.09. Twenty Freescale employees were on the missing Malaysian plane, mostly engineers and other experts working to make the company's chip facilities in Tianjin, China, and Kuala Lumpur more efficient, said Mitch Haws, vice president, global communications and investor relations.

CHINESE DATA WEIGHS ON AUSTRALIAN DOLLAR

The Aussie last traded 0.6 percent weaker at $0.9017, while the loonie bounced back at C$1.1101 after hitting a low of C$1.1073 in Asian trading.

The Australian dollar had been tracking higher towards the end of last week, boosted by signs of improvement in its own economy. But like fellow commodity producer Canada, it depends heavily on China extending a decade of robust expansion.

Authorities in Beijing continued a campaign to halt any further appreciation of the yuan by setting its daily guidance for the currency at the highest since mid-December.

The U.S. dollar held steady against major currencies, supported by hopes that U.S. job growth would pick up in the wake of last week's mildly encouraging report on hiring. The dollar index <.DXY> was up 0.06 percent at 79.767.

In the metals markets, three-month copper on the London Metal Exchange closed at $6,649 a tonne from $6,782 at the close on Friday. It earlier slid as low as $6,608 a tonne, its weakest since June 25 and within a hair of nearly three-year lows.

Adding to the pressure was China's imports of unwrought copper, which fell 30 percent in February from January due to weak Shanghai copper prices. Imports were still up 27 percent from last year's levels.

The Chinese data also weighed on oil. Brent crude fell 92 cents to settle at $108.08. U.S. oil dropped $1.246 to $101.12 a barrel.

Gold prices were little changed, though disappointing data helped underpin the market.

Spot gold inched down 5 cents to $1,339.80 an ounce.

Chinese gold prices were trading at a discount of $5-$6 an ounce to spot prices, traders said, in a sign of weak demand. Prices were at a premium of more than $20 at the beginning of the year.

(Additional reporting by Marc Jones in London and Sam Forgione, Frank Tang and Richard Leong in New York; Editing by Leslie Adler, Chizu Nomiyama and Meredith Mazzilli)