GLOBAL MARKETS-Stocks limp into June on oil and data slips

By John Geddie
LONDON, June 1 (Reuters) - World shares started the new
month on the back foot on Wednesday as sliding oil prices hurt
energy-related shares and a raft of disappointing economic data
dampened demand for riskier assets.
European bourses were led lower by a near 2 percent drop in
the resources sector .SXPP , while earlier in Asia, Australian
mining stocks were among the biggest losers pulling the index
down over 1 percent .AXJO .
Meanwhile, the U.S. dollar floundered against the yen and
the euro after soft data in the world's largest economy prompted
investors to reconsider whether the U.S. will raise interest
rates in the coming months. FRX/
This was followed by manufacturing data showing China's
economy is still struggling to regain traction and euro zone
factory growth at a three-month low.
"Markets kicked off June in an inauspicious style this
morning," said Connor Campbell, a financial analyst at Spreadex.
"China set the tone...the country's continually limp
manufacturing...an unwanted reminder of the global weaknesses
circling the market like vultures."
While stocks struggled, heightened demand for safe haven
bonds pushed German bond yields lower to within 10 basis points
of a 0.05 percent record trough. GVD/EUR
This was partly also driven by the oil price falls which
revived concerns of a global deflationary trend that is forcing
central banks to maintain ultra-easy monetary policy.
Oil prices fell over 1 percent as production from major
Middle East exporters was expected to remain high. Brent crude
futures LCOc1 traded down 60 cents at $49.29 per barrel, with
U.S. crude CLc1 down 51 cents at $48.59 a barrel.
MSCI world equity index .MIWD00000PUS , which tracks shares
in 45 countries, shed 0.1 percent. Asian-Pacific shares outside
Japan also shed 0.1 percent .MIAPJ0000PUS , while the STOXX
Europe 600 .STOXX index also fell 0.5 percent.
Shanghai .SSEC finished in negative territory after
rallying on Tuesday on expectations MSCI could add China's
mainland stocks to its emerging market benchmark for the first
time.
And Japan's Nikkei .N225 lost more than one percent as the
yen firmed against the U.S. dollar in a move that weighs heavily
on its export-dependant economy.
The driving force being the move in the currencies was a
pull back in expectations that the Federal Reserve will raise
rates next month. the dollar was down 0.8 percent at 109.86 yen
JPY= , having come off a one-month high of 111.455 struck on
Monday
Data released on Tuesday showed U.S. consumer confidence
dipped while a survey on business activity in U.S. Midwest also
underwhelmed. That did not bode well for the Institute of Supply
Management's manufacturing survey due later on Wednesday, with
traders saying that a weak reading could see chances of a June
rate hike recede further. ECONUS
"We don't expect the Fed to make a move before at least the
end of the summer," said Arnaud Masset, a market analyst at
Swissquote Bank.
According to CME Group (NASDAQ:CME) FedWatch programme, investors are
pricing only a 22.5 percent probability of a rate move in June,
down from around 32 percent factored in earlier in the week
The euro was at $1.1159 EUR= , putting some distance
between a 2-1/2-month low of $1.1097 touched on Monday.
Sterling was down slightly at $1.4475 GBP=D4 after
dropping more than one percent on Tuesday after polls showing
those who support Brexit may be increasing. GBP/