Global growth worry hits stocks, but U.S. data lifts dollar
By Chuck Mikolajczak
NEW YORK (Reuters) - A gauge of global stocks tumbled on Friday after weak economic data from China and Europe intensified global growth worries as investors weighed the broader impact of the trade dispute between the United States and China.
Euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed.
A separate survey showed French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years in the face of the anti-government protests.
Germany's private-sector expansion slowed to a four-year low, meanwhile, suggesting growth in Europe's largest economy may be weak in the final quarter.
The European data came on the heels of weak readings from China, where November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy as Beijing works to defuse its trade dispute with the United States.
"The world is slowing down. Investors are worried the central banks missed an opportunity in 2013 to try and normalise and now they may be behind the eight ball," said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
"It seems like what they are going to do is move forward without much ammunition to fight the next downturn."
On Wall Street, U.S. stocks were not only hampered by growth worries but by a drop in Johnson & Johnson <JNJ.N> shares, which lost 9.27 percent, its biggest drop in a decade, as the biggest drag on both the Dow and S&P 500 after Reuters reported that the pharma major knew that its baby powder was contaminated with cancer-causing asbestos.
The growth worries overshadowed the latest signs of a thaw in the U.S.-China trade battle, as Beijing said it will temporarily suspend additional 25 percent tariffs on U.S.-made vehicles and auto parts starting Jan. 1, 2019.
The Dow Jones Industrial Average <.DJI> fell 454.66 points, or 1.85 percent, to 24,142.72, the S&P 500 <.SPX> lost 43.73 points, or 1.65 percent, to 2,606.81 and the Nasdaq Composite <.IXIC> dropped 122.49 points, or 1.73 percent, to 6,947.84.
Growth concerns sent European stock markets lower to close out the week. The pan-European STOXX 600 index <.STOXX> lost 0.63 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 1.41 percent. The STOXX still managed a weekly gain of 0.5 percent, however.
Despite the weak global data, the dollar strengthened on the back of solid U.S. data, as consumer spending gathered momentum in November, while industrial production rebounded, further cementing expectations the Federal Reserve will raise interest rates at its Dec. 18-19 meeting.
The dollar index <.DXY> rose 0.39 percent, with the euro <EUR=> down 0.53 percent to $1.1301.
Britain's pound once again weakened after two days of gains, as Prime Minister Theresa May said further assurances on her Brexit deal were possible after European Union leaders told her they would not be renegotiating the agreement and scorned her stilted defence of Britain's departure.
Sterling <GBP=> was last trading at $1.258, down 0.59 percent on the day.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> last rose 7/32 in price to yield 2.8877 percent, from 2.911 percent late on Thursday.
(Additional reporting by Medha Singh in Bengaluru; Editing by Chizu Nomiyama)
