|Global shares retreat on world growth fears, but oil rises|
|Wednesday, 10 October 2012 11:46|
Global shares fell for a third day on Wednesday as corporate warnings of slower growth underscored concerns about a sluggish world economy while oil prices rebounded over worries about the security of Middle East crude supplies.
Weak risk sentiment hurt equity markets and lifted the dollar, after warnings from the International Monetary Fund, the World Bank and U.S. multinationals about the lackluster world economic outlook.
After the close of trading Tuesday, Alcoa warned of dwindling aluminum consumption, while other large companies, including Dow component Chevron (CVX.N) and engine maker Cummins Inc (CMI.N), cautioned about slowing growth.
"You've seen very cautionary earnings results and even forward guidance; Alcoa has good earnings, but their forward guidance is lackluster," said Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia. "It points to a slow China and slow global growth."
The Dow Jones industrial average .DJI was down 38.46 points, or 0.29 percent, at 13,435.07. The Standard & Poor's 500 Index .SPX was down 1.34 points, or 0.09 percent, at 1,440.14. The Nasdaq Composite Index .IXIC was up 2.29 points, or 0.07 percent, at 3,067.31.
Ebbing growth in China, the world's No. 2 economy, is expected to rein in corporate earnings in the third quarter and dent profit forecasts as the Asian nation feels the pinch of the debt crisis in the euro zone, a key trading partner.
The World Bank cut its growth forecast for East Asia earlier in the week on concerns China's slowdown could last longer than expected.
And on Tuesday, the International Monetary Fund said a deepening euro zone debt crisis threatened the global economy.
In Europe, the FTSEurofirst 300 index .FTEU3 of top company shares fell 0.3 percent to 1,092.27, while MSCI's all-country world equity index .MIWD00000PUS slipped 0.3 percent.
The euro rebounded to break even, after falling to its lowest in more than a week against the dollar, pressured by uncertainty about whether and when Spain will apply for a bailout, which is considered the next step forward for Europe.
The euro was up 0.07 percent at $1.2893 after touching 1.2884. The U.S. dollar index .DXY down 0.05 percent at 79.911.
European Union leaders are scheduled to meet at the end of next week. Euro zone finance ministers delivered a united defense of Spain at a meeting this week, saying the country did not need a bailout, at least for now.
"We are in a holding pattern," said John Doyle, currency strategist at Tempus Consulting in Washington. "What we're going to look for the rest of the day and probably next week and a half is if there's any news coming out of Spain and possible decision on a full bailout or not."
Oil prices rebounded after earlier declines as worries over the security of Middle East supplies outweighed increasing evidence of slowing global economic growth.
Brent crude traded near break-even, up 4 cents a barrel to $114.54. U.S. crude rose 56 cents to $92.95 a barrel.
U.S. Treasuries prices fell as traders reduced their bond holdings to make room for $21 billon in 10-year note supply, part of this week's $66 billion in coupon-bearing offerings.
The benchmark 10-year U.S. Treasury note was down 9/32, with the yield at 1.7446 percent.