Growth worries in US and China hammer stocks

Markets end lower after recent spell of gains

Asian markets ended mostly in red as investors booked profits amid ideas that the US economy is headed for a softer recovery than initially expected. The Federal Reserve released the minutes of its June policy meeting yesterday, stating that the economic recovery is softer than initially expected, although not enough to warrant additional quantitative easing. The Fed downwardly revised its growth and inflation projections for 2011 and 2012 while forecasting a higher unemployment rate in 2011.



The Chinese GDP growth was slightly less than expected and sent across worries that the Asian economic powerhouse is likely to witness moderate growth in coming quarters. The Dollar rose in initial trades today as safe haven buying picked up but fell in the European trades, boosting stocks around the globe. However, most of the Asian markets were either closed or drawing to close by this time and failed to garner much of strength due to dollar's slide to 1.2800- another two month low against the Euro today.

The Australian stocks eased on selling in banks and miners, after China's latest growth numbers came in slightly weaker than expected and doubts were raised on the Australia's exports of iron ore and other commodities. The benchmark S&P/ASX200 index closed down 19.8 points at 4442.6 points, while the broader All Ordinaries index shed 20.6 points, or 0.5%, to 4456.7 points.

Japanese shares dropped in line with the Asian markets as exporters were hurt on a stronger yen. The benchmark Nikkei 225 Stock Average shed 109.71 points, or 1.12%, to close at 9,685.53 while the broader Topix index was down 14.13 points, or 1.62%, to 856.6. The Bank of Japan raised its growth outlook for the current financial year to 2.6%, up from the 1.8 per cent projected in April.

In China, stocks eased today as the key 2500 levels on the Shanghai Composite Index continued to elude the investors. Markets factored in weaker economic growth and a lackluster debut by state-owned Agricultural Bank of China Ltd also hurt the sentiments. The benchmark Shanghai Composite Index dropped 46.14 points or nearly 2% to 2,424.30 points. China's second-quarter growth slowed to 10.3 percent from the previous quarter's 11.9 percent and was slightly less than expectations.


In Mumbai, the key benchmark indices declined in choppy trade, mimicking volatile European stocks. Reports that rains were 24% below normal in the week to 14 July 2010, also weighed on sentiments. The BSE 30-share Sensex was provisionally down 21.82 points or 0.12%, up close to 60 points from the day's low and off about equal points from the day's high. As per provisional figures, the BSE 30-share Sensex was down 21.82 points or 0.12% at 17,916.34. The Sensex rose 40.40 points at the day's high of 17978.56 in early trade. The S&P CNX Nifty was down 5.40 points or 0.1% at 5,380.75 as per provisional figures.

In other markets, the Hong Kong's Hang Seng slumped 1.50%, Strait Times In Singapore eased 0.31% while TSEC in Taiwan cooled off 0.13%