* MSCI world share index dips 0.3 pct, European shares edge
* U.S. equity losses limited by strong Goldman results
* Euro recovers as ECB policymaker reassures markets
* German 10-year bond auction draws strong demand
By Ryan Vlastelica
NEW YORK, Jan 16 World stock markets fell
modestly on Wednesday while prices of safe-haven German bonds
and U.S. Treasuries rose as weak economic data from Europe
raised concerns about the health of the global economy.
Financial shares in the United States rallied on strong
corporate results from Goldman Sachs, helping to limit
some of the broader market losses, which came as the World Bank
sharply cut its outlook for world growth.
The view for 2013 growth was reduced to 2.4 percent from 3
percent. The World Bank said a slow recovery in developed
nations was holding back the global economy.
The Dow Jones industrial average was down 19.33
points, or 0.14 percent, at 13,515.56. The Standard & Poor's 500
Index was up 0.54 points, or 0.04 percent, at 1,472.88.
The Nasdaq Composite Index was up 7.90 points, or 0.25
percent, at 3,118.67.
Losses in U.S. equities were offset by financial shares.
Goldman Sachs rose 2.4 percent to $138.82 after it reported
fourth-quarter earnings that nearly tripled, while revenue
surged on dealmaking. Peer financial services firm Morgan
Stanley rose 0.5 percent at $20.53.
JPMorgan Chase & Co also reported sharp increases in
earnings, but its stock fell 1.6 percent to $45.60.
"Both companies had terrific results, and so far it looks
like banks are justifying the run-up they've had over the past
few months," said Wayne Kaufman, chief market analyst at John
Thomas Financial in New York. "But for the economy as a whole,
we're only seeing slow improvement that is not nearly as fast as
we'd like to see."
The MSCI world equity index fell 0.3 percent
while Europe's FTSE Eurofirst 300 index was up
slightly following a series of losses. Japan's benchmark Nikkei
stock average shed 2.6 percent for its largest daily
fall in eight months.
Along with the weak World Bank outlook, industry figures
showed European new car sales plunged in 2012 to the lowest
level since 1995, with all major euro zone markets suffering,
whereas Britain and Sweden recorded growth. This came a day
after Germany reported its economy shrank at the fastest pace in
almost three years in the final quarter of 2012.
"Following the German growth numbers yesterday there is
simply a realization the recession in the euro zone in the
fourth quarter will be much bigger than the previous consensus,"
said Daiwa Securities economist Tobias Blattner.
However, the euro recovered some of its losses against the
dollar after a European Central Bank policymaker eased fears
that officials might undermine the currency's recent strength.
The euro was trading just below $1.33 at around $1.3290
, having made up some of the ground lost when the outgoing
head of Eurogroup, Jean-Claude Juncker, said the currency was
The turnaround came when ECB policymaker Ewald Nowotny said
the exchange rate was "not a matter of major concern,"
reassuring investors that the central bank would not target a
weaker exchange rate to help the region's struggling economies.
U.S. consumer prices were flat in December, pointing to
muted inflation pressures that should help give the Federal
Reserve room to prop up the economy by staying on its ultra-easy
monetary policy path. Equity markets were unmoved by the data.
In bond markets, Germany drew healthy demand for its debt at
an auction of new 10-year bonds.
"Uncertainties about the economic outlook and political
risks continue to loom and today's auction results are a sign
that market dealers still see some value in core (European)
debt," said Annalisa Piazza, market economist at Newedge.
Ten-year German bond yields in the secondary market rose to
put yields at 1.489 percent.
U.S. Treasury prices, meanwhile, extended their recent gains
on concerns about the federal government's debt limit. The
benchmark 10-year U.S. Treasury note was up 2/32,
the yield at 1.829 percent.
Assets traditionally viewed as offering protection against
risk have been boosted this week as political wrangling has
begun again over raising the U.S. government's self-imposed debt
limit, which is expected to be reached before March.
Gold was up 0.6 percent to $1,676.60 an ounce for a
third straight session of gains, supported by expectations that
the world's leading central banks will continue their
ultra-loose monetary policies.
Worries over supply pushed platinum prices up to
$1,689.50 to mark a seventh straight session of gains, the
longest upward streak since early October.
Workers for top producer Anglo American Platinum downed
tools on Wednesday in protest at an announcement from the firm,
known as Amplats, that it would close mines and cut jobs.
Cold weather in Europe and the United States underpinned oil
prices but the rising fears over the global growth outlook meant
any gains were limited.
The Organization of the Petroleum Exporting Countries, in a
monthly report, also said demand for its crude would be lower
than expected in 2013 because of higher supply from rival
Brent futures were up 0.2 percent at $110.54 per
barrel while February crude futures rose 1 percent to
$94.22 on an unexpected drop in U.S. crude oil stockpiles.