World shares held steady on Friday after China's first-quarter growth failed to meet expectations, clouding the outlook for the world's second largest economy but raising the prospect of more policy stimulus from Beijing.
By 1100 GMT, the MSCI world stock index was flat on the day with Asian shares holding up well but Europe on the slide and U.S. stock futures pointing to a lower open on Wall Street.
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Copper and oil both retreated on concerns about demand from China, a voracious buyer of commodities.
Chinese growth eased to an annual rate of 8.1 percent in the first quarter from 8.9 in the previous quarter, below an 8.3 percent forecast and the weakest pace in nearly three years.
It was the fifth consecutive quarter of slowing GDP in the world's most dynamic economy, on which hopes are pinned to sustain global growth, suggesting the slowdown has not bottomed and more policy action would be needed to halt it.
"My big picture's unchanged which is that China will go through a soft bounce," said Vishnu Varathan, market economist at Mizuho Corporate Bank.
MSCI's broadest index of Asia Pacific shares outside Japan was up 1 percent, easing from a rise of 1.3 percent prior to the Chinese data. The FTSEurofirst 300 index of top European shares was down 0.9 percent at 1,034.97.
"We still believe there should be more policy relaxation to add to growth domestically and offset weakness in exports," said Kevin Lai, economist at Daiwa in Hong Kong.
He said Thursday's stronger-than-expected Chinese new lending data was "an indication the government is quite ready to provide more monetary policy support to show that at least the economy is on track for a soft landing".
Spain, now at the epicentre of the euro zone debt storm, saw its bond yields jump again on Friday after data showing Spanish banks borrowed heavily from the European Central Bank in March.
The country's borrowing costs have spiked since the government ripped up a previously agreed deficit target in March, having dropped sharply earlier in the year thanks to a liquidity infusion of more than 1 trillion euros by the ECB.
"This benign environment has come to an end. It's not that easy anymore for the financing agencies in Spain and Italy to sell their paper," Michael Leister, strategist at DZ Bank, said.
OIL, COMMODITIES ON BACK FOOT
Copper led the way lower for commodities, with the London three-month benchmark down 1.5 percent to $8,093 a tonne by 1100 GMT, on track for a second straight week of losses.
Front-month Brent crude slipped 30 cents to $121.41 per barrel. The contract is poised for a fourth straight weekly decline, matching a similar losing streak in late September.
U.S. oil dropped 53 cents to $103.11 a barrel.
Gold edged lower for the same reason but again losses were capped as slower Chinese growth fuelled expectations for further monetary easing.
Commodities' loss was the dollar's gain.
It firmed by 0.3 percent against a basket of major currencies as the weaker-than-expected Chinese growth spurred some risk aversion and safe haven German government bond futures put on half a point.
The euro and the Australian dollar eased in turn. The common currency was down 0.2 percent on the day versus the dollar at $1.3156. It was not expected to break out of the lower end of the $1.30-$1.35 range it has traded in since January.
Traders were looking ahead to U.S. CPI data at 1230 GMT. Analysts said any sign of stronger inflation could limit the Federal Reserve's scope to ease policy further.
Investment bank JP Morgan will also be in focus ahead of its quarterly results, due for release around 1100 GMT.