Alarm Bells Ring as China Sinks, Dollar Tumbles  … European Stocks Suffer Worst 1-Day Fall in Nearly 4 Years 

Alarm bells rang across world markets on Monday as a 9 percent dive in Chinese shares and a sharp drop in the dollar and major commodities panicked investors.
European stocks .FTEU3 opened more than 3 percent in the red after their Asian counterparts slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand. [.SS]. Safe-haven government bonds [EUR/GVD] and the yen JPY= and the euro EUR= rallied as widespread fears of a China-led global economic slowdown kicked in. “Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable,” said Takako Masai, head of research at Shinsei Bank in Tokyo. With serious doubts now emerging about the likelihood of a U.S. interest rate rise this year, the dollar .DXY slid against other major currencies. It was last 121.05 yen having gone as low as 120.73 JPY= in Asia, a level last seen on July 9.
European shares suffered their worst one-day fall in nearly four years on Friday as growing concerns over China’s economy hit world markets. Many investors said they were nervous about the near-term outlook. The pan-European FTSEurofirst 300 index closed down 3.40 percent at 1,427.13 points. The index fell to its lowest level since January and had its worst one-day drop since a 3.44 percent slump in November 2011. It also posted its worst weekly decline since August 2011. The euro zone’s blue-chip Euro STOXX 50 index fell 3.2 percent. Germany’s DAX dropped 3 percent, with the DAX nearly 20 percent below record highs reached in April. Investors across the world were alarmed at the latest Chinese data. The Caixin/Markit manufacturing index showed activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August, heightening fears of a slowdown in the world’s second-biggest economy.
Source: Reuters

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