By Dhara Ranasinghe
LONDON, March 9 (Reuters) - A sharp sell-off in Chinese
shares dragged world stock markets lower and boosted the
safe-haven yen on Wednesday amid renewed concerns about the
outlook for China's economy.
Tuesday's weak Chinese trade figures and slide in oil prices
have revived global growth concerns and prompted investors to
push the pause button on a rally in global stocks.
European shares .FTEU3 opened higher but held below recent
one-month highs, while risk aversion lifted the Japanese yen
against the dollar JPY= and the euro EURJPY= .
In Asia, Chinese shares .SSEC .CSI300 closed more than 1
percent lower, while MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS fell 0.3 percent, down 1.4
percent from a two-month high hit on Monday.
Japan's Nikkei .N225 ended the day down 0.8 percent, its
lowest close in a week.
"Investors are once again focused towards the scanty
economic data over in China and the anxiety is if the People's
Bank of China has the right tools to help the recovery," said
Naeem Aslam, chief market analyst at AvaTrade.
China's February trade performance was far worse than
economists had expected, with exports tumbling the most in over
six years.
Exports dived 25.4 percent from a year earlier on depressed
demand in all of China's major markets, while imports slumped
13.8 percent, the 16th straight month of decline.
The overnight sharp slide in oil also proved worrisome for
investors although crude prices were on firmer ground in early
Wednesday trade.
Brent crude oil futures LCOc1 hit a high of $39.97 per
barrel around 0700 GMT before dipping back to $39.92, still up
27 cents from their last close and over 40 percent higher than
the 2016 lows hit in January.
U.S. crude futures CLc1 were at $36.70 per barrel, up 20
cents from their last settlement and also over 40 percent above
February's 2016 low.
Oil prices fell about 3 percent on Tuesday, ending six days
of gains for benchmark Brent crude futures, after industry data
showed U.S. stockpiles reached record highs again last week.
"Although oil prices have risen sharply from the trough,
many investors are not yet convinced if things have improved
that much and I suspect they judged now is a good time to sell,"
said Tatsushi Maeno, managing director of PineBridge
Investments.
"But I do believe that this year the global economy will
prove better than last year," he added.
YEN RALLIES
Against a backdrop of general risk aversion, assets
perceived to be safe fared better.
The yen JPY=EBS , for example, rose to a one-week high of
112.42 per dollar and was up 0.5 percent against the euro at
123.35 EURJPY= .
The People's Bank of China set the yuan's midpoint rate
CNY=SAEC at 6.5106 per dollar prior to market open, weaker
than the previous fix. The currency opened stronger at 6.5062
but has since weakened to 6.5178 CNY=CFXS .
The euro EUR=EBS meanwhile slipped 0.4 percent to around
$1.0962 ahead of the European Central Bank's policy meeting on
Thursday.
Financial markets expect the ECB to cut its deposit rate by
at least 10 basis points and expand its asset-buying programme.
With so much priced in, however, some traders are primed for
a repeat of the sharp gains in the euro seen in December when
the ECB's measures fell short of market expectations.
Ahead of the ECB, the Bank of Canada will announce a policy
decision later on Wednesday.