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GLOBAL MARKETS-Stocks skittled by weak China data, strong dollar

Published 13/10/2016, 11:42 pm
© Reuters.  GLOBAL MARKETS-Stocks skittled by weak China data, strong dollar
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* European shares slip, pound extends slide

* Chinese trade data raises more FX weakness concerns

* Asian FX hit by U.S. rate view; Thai baht in focus

* Risk aversion pushes Japanese yen higher

By Marc Jones

LONDON, Oct 13 (Reuters) - World stocks stumbled to their lowest level in a month on Thursday and the dollar and benchmark bond yields slipped, after a sharp decline in Chinese exports revived concerns about the health of the world's second-biggest economy.

Riskier assets have had a difficult few weeks, undermined by concerns about a potential rise in U.S. interest rates, the outcome of U.S. elections, Britain's departure from the EU and the health of German and Italian banks.

Asia's markets suffered falls overnight after data showed Chinese imports in dollar terms were back in contractionary territory, while exports dropped by a sharper-than-expected 10 percent. took a thumping too, with falls of 0.7-1.3 percent for Britain's FTSE .FTSE , Germany's DAX .GDAXI and France's CAC .FCHI pulling the region .STOXX down for the sixth day in the last seven ahead of what was expected to be a 0.5 percent fall on Wall Street. .N ESc1

"We have got a stronger dollar and that is the market now pricing in the likelihood of a December U.S Fed rate hike," said Rabobank currency strategist Jane Foley.

"The other theme is the weakness of Chinese exports. That does help turn the spotlight on the recent weakness of the yuan. Then of course there is sterling."

Bets on a Federal Reserve move remained broadly unchanged after minutes on Wednesday from the U.S. central bank's last meeting had shown policymakers still grappling over timing, but on balance inching closer to a hike. minutes said "it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation."

That was just enough uncertainty to pull the dollar off a 2-1/2-month high versus the yen JPY= and push ten-year yields on U.S. government debt US10YT=RR down 5 basis points to 1.74 percent, a relatively large move out of U.S. hours.

There was no reprieve for Britain's pound though as it fell to $1.2150 GBP= and to 90.5 pence per euro EURGBP=R , extending a slump of 15 percent or more since the UK's June vote to leave the EU. FRX/ (for graphic click http://tmsnrt.rs/2egbfVh)

The impact of the plunge was starting to show beyond the market too, as the UK's largest supermarket Tesco TSCO.L started taking some of the products from one of its biggest suppliers, Unilever ULVR.L , off its shelves after refusing to accept a 10 percent price hike. spat sent both firms' shares down over 2 percent and Unilever's close to 3. .EU "Clearly Unilever won't be the only company wanting to pass on a 10 percent or similar price increase due to the fall in the pound," Rabobank's Foley added.

THE ANTI-TAPER

With U.S. earnings season kicking off, Wynn Resorts WYNN.N and Delta Airlines (NYSE:DAL) are scheduled to report later ahead of a host of big name banks on Friday. .N

Germany's Deutsche Bank (DE:DBKGn) < DBKGn.DE> saw its battered shares drop 2 percent in Europe after it was hit with its latest fine and sources said it was implementing a hiring freeze. euro was choppy too, dropping under $1.10 EUR= for the first time in almost three months at one point after Reuters reported the ECB was considering a number of changes to its 1.5 trillion euro stimulus programme. at the central bank told Reuters the options included occasionally buying bonds with yields lower than its -0.4 deposit rate as well as being a bit more flexible on how much of each countries' bonds it buys.

Back in China, the poor batch of trade numbers saw the offshore version of the yuan CNY= fall to lows last reached in a dramatic sell-off in January and the tightly controlled 'onshore' one CNH= hit a six-year low.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS touched its lowest since Sept. 19 too as Hong Kong stocks .HSI fell 1.2 percent and Japanese shares .N225 dropped 0.4 percent thanks to a stronger yen.

"The China data has exacerbated the broad cautious mood and we should see more gains for the yen and other safe-haven assets," said a currency trader at an Asian bank in Hong Kong.

The Thai baht THB= held close to an eight-month low as Bangkok announced the death of 88-year-old King Bhumibol Adulyadej, the world's longest reigning monarch.

Turkey's lira TRY= hit a record low after the government signalled it was reviving plans for an executive presidency for Tayyip Erdogan prices steadied following a 1 percent drop overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over a pledge to restrict output. O/R

Copper CMCU3 and other industrial metals were flushed lower however by the China jitters MET/L , while safe-haven gold XAU= edged up to $1,257 an ounce following a 6 percent slump over the last three weeks.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

($1 = 0.8928 euros)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global assets in 2016

http://reut.rs/1WAiOSC Currencies in 2016

http://link.reuters.com/tak27s Emerging markets in 2016

http://reut.rs/1ZKAaO6 European bank woes

http://tmsnrt.rs/2du8iw4

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