MarketsEurope shaken by fears over global growth – Financial Times

European stock markets have opened sharply lower, with investors fleeing into US government bonds after the World Bank cut its global growth forecast and the commodities shakeout spread from oil to copper.

The income yield on 10-year US treasury bonds briefly hit 1.85 per cent, its lowest since May 2013, as buyers sought shelter in the full faith and credit of the US government amid a sell-off of riskier assets.

The price of Brent crude, the global oil marker, has slid another 2.1 per cent to $ 45.6 a barrel, its lowest the depths of the global financial crisis six years ago. London-traded copper futures for delivery in three months’ time have fallen 4.6 per cent to $ 5517 per tonne.

In its twice-yearly Global Economic Prospects, the World Bank forecasts the world economy will expand by 3 per cent this year and by 3.3 per cent in 2016. In June the Bank’s economists had predicted global growth this year and next to be 3.4 per cent and 3.5 per cent respectively.

The World Bank said:

Risks to the outlook remain tilted to the downside, due to four factors. First is persistently weak global trade. Second is the possibility of financial market volatility as interest rates in major economies rise on varying timelines. Third is the extent to which low oil prices strain balance sheets in oil-producing countries. Fourth is the risk of a prolonged period of stagnation or deflation in the Euro Area or Japan.

On Europe’s main indices:

• The FTSE Eurofirst 300 has fallen 1.3 per cent, or 18 points, to 1,357 points.
• The UK’s FTSE 100 is down 1.6 per cent, or 101 points, to 6,439.
• Germany’s Xetra Dax has lost 1.4 per cent, or 141 points, to 9,800.
• In Paris, the CAC 40 has declined by 1.8 per cent, or

The UK’s blue-chip market is being dragged down by commodities-related stocks. Premier Oil, the UK oil producer, opened 7 per cent lower before recovering slightly to trade down 6 per cent at 128p after it said lower Brent prices would force to take a $ 300m impairment charge. Chilean copper producer Antofagasta‘s shares have also fallen 10 per cent to 638.5p.

And on a busy morning for UK consumer industry results, shares in UK fashion chain SuperGroup are trading 9.2 per cent higher at 882p after it chased up a pre-Christmas profit warning with the reassuring news that its festive sales rose by more than 12 per cent.

Shares in Burberry have ticked up by 0.5 per cent to 1,672p, even after it reported a fall in sales in Hong Kong, a crucial market for luxury brands, amid mass pro-democracy protests in the Chinese territory last Autumn.