Global stocks slip on China data, European shares recover some ground

LONDON: Global stocks slipped on Wednesday for the third time in four sessions as more disappointing Chinese economic data and the absence of meaningful stimulus from Beijing continued to weigh on investor sentiment.

European stocks and U.S. futures edged higher, however, after dropping sharply on Tuesday. Investors were waiting for minutes from the Federal Reserve's July meeting, due out later on Wednesday.

The MSCI World stock index was down 0.25% as of 1145 GMT. Asian equities saw the biggest drops, with the MSCI Asia index, which excludes Japan, falling 1.04%. "Much of the decline is explained by continuing concerns surrounding the economic slowdown in China, as well as rising tensions with the U.S.," said Thomas Gehlen, senior market strategist at Kleinwort Hambros.

China's new home prices fell for the first time this year in July, data showed on Wednesday. The Chinese central bank lowered its policy rate on Tuesday, after a long run of weak figures, but investors have so far been unimpressed by the response.

News that a leading Chinese trust firm has missed repayments on dozens of investment products since late last month added to fears the country's property crisis would have a wider impact. "If things deteriorate further, if there's more sign of a contagion or financial stress in the banking sector, I think it's inevitable that the U.S. or other markets will see some impact," said Janet Mui, head of market analysis at RBC Brewin Dolphin.

Europe's STOXX 600 stock index was little changed on Wednesday after Tuesday's 0.93% fall, which was driven by concerns about global inflation and China. It traded just above a one-month low hit earlier in the session. Futures on the U.S. S&P 500 index and Nasdaq were both flat.

The S&P 500 fell 1.16% on Tuesday after stronger-than-expected U.S. retail sales data added to the pressure on the Fed to keep interest rates at high levels. Germany's DAX was up 0.21% after losing 0.86% on Tuesday, while Britain's FTSE 100 fell 0.36% following a 1.57% drop.

In currency markets, sterling picked up after data showed that Britain's inflation fell in July but the core measure came in slightly higher than expected. It was last up 0.29% at $1.274. The dollar index, which measures the currency against six major peers, was down 0.1% at 103.11, ending a run of four straight daily increases.

Investors have bought the safe-haven dollar on the back of strong U.S. economic data and rising concerns about China. The euro was up 0.12% at $1.092. Markets will get a sense of the Fed's thinking on interest rates at 1800 GMT (2 p.m. ET), when the minutes from July's decision are released. The Fed raised rates by 25 basis points to a 5.25% to 5.5% range at the meeting.

According to pricing in derivatives markets, traders think the Fed has probably finished raising rates. "There's very little priced in for the September meeting and there's only 10 basis points priced in for the early November meeting, which I think is significantly underpricing the risks that there will be a rate hike at one of those two meetings," said Colin Asher, senior economist at Mizuho.

The yield on the 10-year U.S. Treasury note was down 3 basis points at 4.189% on Wednesday, after hitting a more than nine-month high of 4.274% in the previous session. U.S. crude oil and Brent crude were little changed, at $80.92 a barrel and $84.81 a barrel respectively.