Global Shares Struggle Amid China Worries
Signs that the U.S. economy is regaining strength buoyed the dollar on Monday but shares and commodities gave up some of last week's strong gains as investors fretted about a possible slowdown in Asia and Europe's struggle with big debts and scant growth.
China's weak export data released over the weekend, showing a record monthly trade deficit for February, set the early tone in risk asset markets, coupled with recent numbers showing falling inflation, softer retail sales and lower industrial output than expected in the world's second largest economy .
Emerging market shares were down 0.4 percent, Brent crude oil fell for the first time in four sessions and gold and copper prices slipped. But the U.S. dollar hit a seven-week high of 80.132 against a basket of currencies after Friday's strong U.S. jobs data.
"A lot of people are going to jump on the positive U.S. data and the positives for the dollar ... The U.S. data from last week taken together was pretty robust" said Paul Robson, currency strategist at RBS.
However, market moves were expected to be limited ahead of Tuesday's U.S. Federal Reserve policy meeting, which will look at whether the current programme of monetary stimulus, due to expire in late June, will be extended.
In Europe renewed demand for bank shares after the successful Greek debt restructuring prompted European stocks to reverse early losses and turn slightly positive.
On Friday Greece averted the immediate threat of an uncontrolled default when enough private creditors agreed on a bond swap deal to clear the way for a new bailout.
The FTSEurofirst 300 index index of top European shares was up 0.2 percent at 1,081.39 points, after closing 0.4 percent higher on Friday.
The euro was near one-month lows against the dollar at $1.3114, having dipped to as low as $1.3079 in Asian trading, its lowest level since Feb. 16.
Safe-haven German Bund futures rose on Monday as concerns about growth and contagion risks linked to the euro zone debt crisis resurfaced after the relief spurred by the smooth passing of the Greek debt restructuring.
German government bond futures opened higher on concerns the fragile growth outlook could derail debt-laden Portugal, and cause fresh worries in Spain and Italy.
June German Bund futures rose 22 ticks to 138.72, edging to within 6 ticks of the contract high.
Riskier Spanish 10-year bond yields rose 4 basis points to 5.05 percent, while their Italian equivalent was 3 basis points higher at 4.87 percent.
Oil took its lead from the Chinese data with Brent crude slipping towards $125, ignoring support offered by a better outlook for the U.S. economy and Middle East supply concerns.
Brent crude oil futures for April fell 55 cents to $125.43 a barrel, while U.S. crude was down 55 cents at $106.85.
Gold edged down $3.32 to $1,704.71 an ounce as some investors opted to stay on the sidelines ahead of the U.S. Federal Reserve meeting. The precious metal has risen more than 9 percent this year.