Weak German data drags global stocks down
NEW YORK (Reuters) - Global stock markets fell and oil prices slipped to near 27-month lows on Tuesday after a second day of weak data out of Germany, the euro zone's largest economy.
Wall Street stocks fell ahead of this week's start of third-quarter earnings season, with the surging dollar's effect on corporate bottom lines a key topic for conference calls. [.N]
A day after news of the biggest monthly drop in German industrial orders since the global financial crisis in 2009, data showed the country's industrial output plunged 4 percent in August in the biggest fall in more than five years.
MSCI's all-country world index of equity performance in 45 countries fell 0.54 percent, while the pan-European FTSEurofirst 300 index lost 1.47 percent.
"World equities are reacting to much more evidence of weakness. Germany?s starting to slow down and it was the engine of the European economy. That?s clearly a concern, investors weren?t happy with it," said Ken Polcari, director of the NYSE floor division at O'Neill Securities in New York.
Treasury prices rose on the weak German data. Benchmark 10-year U.S. Treasury notes were last up 10/32 in price to yield 2.3891 percent, the lowest in about a month.
The dollar index slipped for a second consecutive session, but was still trading near four-year highs. The dollar index , which tracks the greenback against six major currencies, was last down 0.1 percent at 85.839.
Against the yen, the greenback was down 0.35 percent at 108.34 yen . The euro slipped against the dollar by 0.25 percent to $1.2621.
Stocks in London , Paris , Milan and Madrid took sharp tumbles too, while Italian, Spanish and French government bonds yields rose amid doubts about what a slowing Germany would mean for their more fragile economies.
Europe's troubles are occurring in tandem with weakened growth in other parts of the world. Apart from the United States, indicators of global demand have slipped sharply over the past few months as unrest in Ukraine, the Middle East and parts of Asia have all taken a toll.
The IMF cut its global economic growth forecast to 3.3 percent this year and 3.8 percent next year from forecasts in July of 3.4 and 4 percent, respectively.
On Wall Street, the Dow Jones industrial average fell 159.14 points, or 0.94 percent, to 16,832.77, the S&P 500 lost 16.24 points, or 0.83 percent, to 1,948.58 and the Nasdaq Composite dropped 38.86 points, or 0.87 percent, to 4,415.95.
In contrast with the broader weakness in stocks, the mining sector got a rare boost as Rio Tinto shares jumped after it rejected a merger approach from smaller rival Glencore to create $160 billion industry giant.
Brent crude oil fell 1 percent to $91.77 a barrel, not far from Monday's low of $91.25, which was the lowest since June 2012. U.S. November crude was down 82 cents at $89.52.
(Editing by James Dalgleish)