London - World stocks fell towards a recent 11-month low on
Monday, while the euro and oil prices slipped as concerns about a global
economic downturn prompted investors to sell risky assets.
Persistent worries that the sovereign debt crisis in
eurozone peripheral countries may spread to bigger regional economies also kept
safe haven flows into gold, which hit another record high.
The benchmark MSCI World Index has now fallen five weeks in
a row and is on track for the worst monthly performance since October 2008, a
period of global market turmoil after the collapse of Lehman Brothers.
"Markets run on two emotions: fear and greed, and we
have switched to the fear emotion in recent weeks. Recession fears are major
concerns for investors and we have seen a lot of economic indicators slowing
quite substantially," said Keith Bowman, equity analyst at Hargreaves
Lansdown.
The MSCI world equity index fell 0.7%. European stocks
erased opening losses while emerging stocks lost 1.3%, with losses led by
Shanghai shares which hit a 13-month low.
"A bigger concern is a slowdown in China's economy. We
haven't reached that stage yet, but the equity market could be pricing that in,
just in case," said Lee Wee-Liat, regional head of property at Samsung
Securities.
US crude oil fell more than 1%. On top of a weak economic outlook, the potential for a restart of Libyan oil flow into the market if the Gaddafi regime collapses also weighed on prices.
Bund futures rose 42 ticks.
Gold hit a third consecutive all-time high near $1 900 an
ounce, after staging its biggest weekly gain in two-and-a-half years last week.
The euro fell 0.1%. The dollar held above a record low
around ¥75.94 hit on Friday, thanks to concerns about intervention by
Japanese authorities.
The US currency rose 0.1% against a basket of major
currencies.
Investors are waiting for signs of further stimulus from the
Federal Reserve when bankers gather in Jackson Hole, Wyoming, late this week,
one year after chairperson Ben Bernanke launched a second round of quantitative
easing to revive the economy.
Additional bond purchase by the Fed could help reflate asset
prices, but many view the chances of a third round of quantitative easing as
limited and expect the Fed to take gradual measures to boost the economy.