Japanese stocks, US bond yields fall on growth concerns
Credit: Reuters/Toru Hanai
A woman holding a parasol stands as passers-by walk past an electronic board showing Japan's Nikkei average, outside a brokerage in Tokyo September 25, 2014.
Japan's Nikkei share average .N225 fell 1.9 percent to levels last seen in mid-August. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS managed to nudge up 0.2 percent but was still within sight of its 6 1/2-month low hit on Monday.
'There are downside risks to the global economy on the whole. And the G20 meeting last weekend showed there is no panacea to lift the economy,' said Hirokazu Kabeya, senior strategist at Daiwa Securities.
The specter of a possible recession in Europe, a slowdown in China and sluggish growth in Japan have prompted investors to pull some of their money out of equities ahead of the earnings seasons in the U.S. and elsewhere.
The U.S. Federal Reserve is expected to wind up its bond buying scheme later this month -- another reason for investors to be cautious on stocks as the completion of the Fed's two previous quantitative easing programs triggered a major correction in Wall Street shares.
U.S. S&P 500 .SPX fell 1.7 percent on Monday to five-month low, posting its worst three-day slide since November 2011 while European shares .FTEU3 hit a seven-month intraday low.
The volatility index .VIX rose to 24.6 percent, highest level since June 2012, when the world's financial markets were rattled by the European sovereign debt crisis.
Investors are flocking to the safety of government debt, with the 10-year U.S. bond yield slipping to 2.240 percent US10YT=RR, its lowest level since June last year.
The U.S. dollar stumbled after a months-long rally as concerns over the global growth outlook undermined the case for an earlier start to the Fed's rate-tightening cycle.
Fed Vice Chairman Stanley Fischer said on Saturday that the global outlook might hamper the effort to normalize U.S. monetary policy after years of extraordinary stimulus.
The dollar index stood at 85.347 .DXY =USD, off a four-year high of 86.746 hit earlier this month.
The euro traded at $1.2716 EUR= while the yen stood at 107.10 per dollar JPY=.
Oil prices flirted with four-year lows, weighed by global demand concerns and by signals from key producers that they plan to keep output high despite the latest shakeout in prices.
Kuwait said OPEC was unlikely to cut production to support prices, while Saudi Arabia has privately told oil market participants it could be comfortable with $80 per barrel.
Brent oil futures traded at $88.23 per barrel LCOc1, not far from a four-year low $87.74 hit on Monday.
(Editing by Shri Navaratnam)
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