(Adds close of European markets, oil price settlement)
* Wall St, European stocks slump on weak China trade data
* Oil prices rebound on reassessment of government report
* Dollar weakens against yen, euro on trade data
* Bond prices rise on Chinese data
By Herbert Lash
NEW YORK, Oct 13 Global equity markets slumped
to a three-month low on Thursday after disappointing Chinese
trade data renewed concerns about the world's second-largest
economy, but rebounding oil prices and the dollar's market role
led U.S. stocks to pare losses.
Stocks on Wall Street fell almost 1 percent and in Europe a
bit more at their lows, following data that showed Chinese
imports in dollar terms had contracted and exports dropped by a
sharper-than-expected 10 percent.
The unexpected trade figures pointed to weaker Chinese
demand both at home and aboard while deepening concerns over the
latest depreciation in China's yuan currency, which
hit a fresh six-year low against a firming U.S. dollar.
"If the Chinese economy is struggling it is a problem for
the global economy and you're seeing that reflected in the
capital markets, whether it be the strength in the dollar or the
volatility in equities," said Michael Arone, chief investment
strategist at State Street Global Advisors in Boston.
Oil prices rebounded after an initial bearish reading from a
U.S. Energy Information Administration report soon focused on
sharp inventory drawdowns in distillates, including diesel and
heating oil, and a decline for gasoline.
The reversal in oil prices helped turn markets that have
traded inversely to the dollar. In recent weeks that dollar has
strengthened on growing expectations of a Fed rate hike, which
had weakened stocks, said Michael James, managing director of
equity trading at Wedbush Securities in Los Angeles.
"As you've seen the dollar pull back today and oil rally off
its lows, the two of those combined have seen some macro money
rotate into long equity positions," James said.
"That's why the (stock) market has rallied off its lows."
The Dow Jones industrial average fell 38.48 points,
or 0.21 percent, to 18,105.72. The S&P 500 slid 4.85
points, or 0.23 percent, to 2,134.33 and the Nasdaq Composite
lost 19.10 points, or 0.36 percent, to 5,219.92.
In Europe, the FTSEurofirst 300 index of leading
regional shares closed down 0.91 percent to 1,323.95. MSCI's
all-country world stock index of equity markets
in 46 countries fell to lows last seen on July 12 before paring
some losses to trade 0.34 percent lower.
In London, mining stocks BHP Billiton and Rio Tinto
fell 4.4 percent and 4.9 percent, respectively, due to
the trade data from China, the world's biggest metals consumer.
The dollar tumbled from a seven-month high as risk appetite
took a turn for the worse on the soft Chinese data, which
rattled markets that expect the Fed to boost rates by year-end.
The U.S. currency also fell from a more than two-month high
against the yen and Swiss franc, two safe-haven currencies that
benefit in times of political or financial stress.
The dollar was last down 0.59 percent against the yen at
103.57 yen. The euro fell briefly below $1.10 for the
first time since July, but quickly recovered to trade 0.39
percent higher on the day at $1.1049.
A hard landing in China, if that were to occur, would pose a
bigger problem to the global economy than a "hard exit" by
Britain from the European Union because of China's greater
economic size and trade profile around the world, Arone said.
China concerns could also deter the Federal Reserve from
raising U.S. interest rates in December as minutes released
Wednesday from a September policy meeting suggested, he said.
Oil prices initially fell more than 1 percent after U.S.
government data reported the first domestic crude inventory
growth in six weeks, a build above market expectations.
Brent crude rose 22 cents to settle higher at $52.03
per barrel, while U.S. West Texas Intermediate crude rose 26
cents to settle at $50.44.
The weak Chinese data pushed investors to buy safe-haven
government debt after two straight days of selling.
The 10-year note rose 11/32 in price to yield
Europe's benchmark government bond yield retreated from
one-month highs after the latest signals from the world's
central banks soothed fears that monetary stimulus could be
German 10-year yields - the euro zone's benchmark - fell 3.6
basis points to 0.03 percent, pulling back from a
one-month high hit on Wednesday, according to Tradeweb.
(Reporting by Herbert Lash; Editing by Nick Zieminski)