World stocks dipped towards the previous session's four-week lows today as investors continued to fret over the early removal of government stimulus, particularly in the financial sector.
Positive US manufacturing and home sales data buoyed US stocks yesterday, but investors worry that signs of recovery will lead governments to cut economic and fiscal support, a fear that has contributed to a reversal of equities' seven-month rally.
European shares hit four-week lows as poor results from Swiss bank UBS and a shake-up of UK banks Lloyds and Royal Bank of Scotland rattled investors.
Lloyds launched a record £13.5 billion rights issue and along with RBS agreed to sell off businesses as part of a complex deal to limit reliance on government support.
World stocks as measured by MSCI fell 0.6 per cent to 281.32. The index rallied by 75 per cent between early March and late Oct on growing optimism over the global economy, but fell 4 per cent last week.
The FTSEurofirst 300 index of top European shares fell 1.5 per cent to a four-week low, losing ground for the sixth time in nine sessions. Riskier emerging market shares fell 1.0 per cent.
The dollar edged up against the euro but fell 0.4 per cent against the yen. Currency markets are likely to trade cautiously ahead of a raft of key events this week.
The Federal Reserve starts a two-day meeting on interest rates today, the European Central Bank and Bank of England make rate decisions on Thursday, US employment data is due on Friday and G20 finance ministers meet in St Andrews, Scotland, this weekend.
Reuters