By Marc Jones
LONDON (Reuters) - World stocks fell for the fifth straight day on Thursday, sliding back towards two-year lows on growing unease about global growth and as VW's emissions test-fixing scandal hit Europe's carmakers again.
A 2.2 percent tumble for Tokyo's Nikkei as Japan returned from an extended break had set a gloomy tone in Asia and Europe's bourses and Wall Street futures were dragged back deep into red after an early foray higher.
There had been some reassuring German and French sentiment data and the shares of Volkswagen, which have been battered since the revelations it cheated diesel emissions tests, clawed back 3 percent.
But fresh 4-5 percent falls in the stocks of BMW, Renault Fiat and Daimler highlighted the worries that other manufacturers might be dragged into the crisis.
They pulled London's FTSE, Frankfurt's DAX and Paris's CAC 40 down 0.6, 1.8 and 1.6 percent respectively to leave MSCI's 45-country All World index with its fifth day of losses.
Things were equally choppy in the currency and emerging markets.
Norway's crown slumped 2 percent after its central bank unexpectedly cut interest rates while the euro held onto gains it had made on Wednesday, when European Central Bank chief Mario Draghi appeared to suggest a fresh round of money printing wasn't as close as many analysts had thought.
Federal Reserve head Janet Yellen is due to speak later and will draw intense interest after the Fed delayed its first rate hike in almost a decade again last week.
While there are worries that a tightening in U.S. monetary policy could slow global growth, investors are now becoming concerned that not raising rates might actually be worse given what it would say about the health of the global economy.
"I'm really convinced that what we are seeing at the moment is the epitome of the QE (quantitative easing) trap," said Didier St Georges, a member of the investment committee at fund giant Carmignac.
"QE is not good news for financial market assets anymore."
As well as Yellen, a flurry of U.S. data is due later including jobless claims and durable goods orders that investors hope will give a clearer picture of the state of the world's largest economy.
EMERGING MARKETS STRUGGLE
Despite the nervy markets, commodities saw some relief after a frenetic last few days. Brent and U.S. oil prices nudged back up after slumping 2.7 percent on Wednesday on the back of an unexpectedly large buildup in U.S. gasoline stocks.
Platinum which has been hammered by the VW scandal because it used in catalytic converters to clean exhaust emissions, also rebounded having hit its lowest level in more than 6-1/2 years. It last stood at $944.00 per ounce.
"The market is obviously pre-empting a possible disruption to the whole diesel catalytic converter sector and we now need to see what the future holds for diesel demand in the U.S. and the reverberations in Europe," Saxo Bank senior manager Ole Hansen said.
But with the mood still shaky, there was renewed demand for the relative safety of benchmark German and U.S. 10-year government bonds.
Emerging market currencies remained under heavy fire too.
The Brazilian real sank to a new all-time low of 4.179 per dollar, clobbered by a recession, fiscal deficit and political instability following corruption allegations against leading politicians in the world's seventh-largest economy.
The Australian dollar, often used as a proxy for China-related trades, struggled near a two-week low of $0.6989 in what had been another largely gloomy day for the whole region.MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.4 percent to add to their biggest single-day fall in almost a month the previous day.
Shanghai shares trimmed their early gains to end up roughly 0.6 percent, while Hong Kong's Hang Seng shed 1 percent and stocks in Indonesia slumped more than 2 percent on reports it was set to cut its growth forecasts.
Wall Street was expected to see a subdued start later too with the S&P 500, Dow Jones Industrial and Nasdaq all pointing to losses of 0.8 to 1 percent.
They had swooned on Wednesday too, having been hit by tepid U.S. factory data and signs that China in its worst manufacturing contraction since the global financial crisis..
"Investors will be cautious for the time being. Markets will become steadier only when uncertainties over the Chinese economy and U.S. monetary policy diminish," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
(Reporting by Marc Jones; Editing by Hugh Lawson)
