GLOBAL MARKETS-Economic growth worries hit stocks, euro gains

by on August 13, 2012 2:38 pm GMT

Mon Aug 13, 2012 10:38am EDT

* Euro gains 0.6 pct vs dollar, seen vulnerable to sell-off

* Market moves capped by prospect of central bank action

* Oil tops $114 a barrel on growing supply worries

By Herbert Lash

NEW YORK, Aug 13 (Reuters) – World stock markets eased on
Monday after weak Japanese economic data added further evidence
that the global economy is slowing, while the euro rose as
investors exited bearish bets against the common currency.

Stocks on Wall Street opened lower, following losses in
stock indices for Europe and emerging markets.

U.S. stocks dipped after the S&P 500’s six-day run of gains
as data showed Japanese gross domestic product expanded just 0.3
percent in the second quarter. The pace was half expectations,
raising doubts about the global economy while highlighting the
impact of Europe’s debt crisis on worldwide demand.

Stocks’ recent gains have relied on investor hopes for
central bank easing amid signs of global economic weakness.

“Japan was a little weaker than expected. It might raise
hopes that there might be some central bank coordination, but
I’m not seeing that in any of the markets today,” said Fred
Dickson, chief market strategist at D.A. Davidson & Co. in Lake
Oswego, Oregon.

“We are a bit extended. We just need a little bit of
settling back down after a fairly substantial run-up.”

The Dow Jones industrial average was down 39.14
points, or 0.30 percent, at 13,168.81. The Standard & Poor’s 500
Index was down 3.84 points, or 0.27 percent, at 1,402.03.
The Nasdaq Composite Index was down 6.65 points, or 0.22
percent, at 3,014.21

Gold prices also rose along with the euro on expectations
the ECB will step in to support the common currency, which
pressured the dollar. Speculation that weak growth will prompt
further central bank stimulus measures also buoyed the euro.

The euro was up against the U.S. dollar for the first time
in four sessions, but it remained below a one-month high hit
last week in thin trade.

“The euro is well below the highs of last week and today we
are seeing some short covering, but the move today is generally
uninspired in a lackluster session,” said Marc Chandler, global
head of currency strategy at Brown Brothers Harriman in New

The euro was up 0.63 percent at $1.2366 and the U.S.
dollar index down 0.36 percent at 82.255.

Short covering involves buying the euro to close bets that
had been wagered the currency would fall.

Many analysts expect the euro to tread water until Sept. 12,
when the German constitutional court delivers its verdict on the
euro zone rescue fund and the fiscal pact for budget discipline.

Spot gold prices rose $1.01 to $1620.50 an ounce.

Oil hit $115 a barrel for the first time in more than three
months as concern about supplies and hopes that governments will
roll out more stimulus measures outweighed signs of weakening
fuel demand.

Brent crude was up $1.04 at $113.99 a barrel. U.S.
light sweet crude oil rose 24 cents to $93.11 a barrel.

U.S. Treasuries yields dropped for the third day on Monday
as some investors were drawn to higher yields caused by a
dramatic selloff earlier this month.

The benchmark 10-year U.S. Treasury note was up
6/32 in price to yield 1.6386 percent.