December 16, 2017
Wednesday, January 6, 2016

Global shares fall; European stocks hit 3-week low on China concerns

An investor sits in front of a screen showing stock market movements in a stock firm in Fuyang, east China''s Anhui province.

All three major indexes fell more than 1 percent as investors looked for safe havens after China allowed its currency to weaken further and oil prices fell to their lowest in more than 11 years.

Investors were also nervous about rising geopolitical tensions after North Korea said it had successfully tested a hydrogen bomb and Saudi Arabia cut ties with Iran.

The People's Bank of China on Wednesday set the yuan's official midpoint rate at its weakest level in 4-1/2 years, while a PMI survey showed services sector activity expanded at its slowest rate in 17 months in December in the country.

Gold hit a four-week high, while the US dollar touched a one-month high against a basket of major currencies.

The Dow Jones industrial average dropped 241.88 points, or 1.41 percent, at 16,916.78, the S&P 500 27.41 points, or 1.36 percent, at 1,989.3 and the Nasdaq Composite 65.35 points, or 1.34 percent, at 4,826.08.

European equities slipped to a three-week low hit by weakness in the commodity sector as concerns over the Chinese economy resurfaced after it allowed the yuan to weaken further and poor services sector data was reported.

The FTSEurofirst 300 index of top European shares closed 1.3 percent lower at 1,392.40 points after falling to 1,382.96, the lowest level since mid-December.

Japanese stocks fell after a private survey stoked fears that China's economy may be losing steam while North Korea's claims that it tested a hydrogen bomb introduced fresh geopolitical uncertainty that blunted risk appetite.

The Nikkei share average fell 1 percent to 18,191.32 for its lowest close since October 19.

Less than two hours after the survey results were released, North Korea said it had successfully conducted a test of a miniaturised hydrogen nuclear device, which would mark a significant advance in the isolated state's technological capability.

Worries over China's economy and uncertainty about North Korea's latest provocation largely overshadowed a survey showing that Japan's services sector activity expanded in December at roughly the same pace it did in the previous month, and that new business grew at its fastest rate in four months.

All but three of 33 Topix subindexes ended the day in negative territory, with pharmaceutical shares gaining 0.5 percent and food shares adding 0.3 percent as investors bought into defensive, domestic-sensitive stocks. The broader Topix fell 1.1 percent to 1,488.84 and the JPX-Nikkei Index 400 slipped 1 percent to 13,412.15.

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