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GLOBAL MARKETS-Weak China data knocks global stocks off record highs

Published 14/09/2017, 06:11 pm
© Reuters.  GLOBAL MARKETS-Weak China data knocks global stocks off record highs
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* World stocks pull back after flurry of sub-par data

* Dollar dips before U.S. inflation numbers

* Swiss franc eases after central bank says "highly valued"

* Gold hits two-week low

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Nigel Stephenson

LONDON, Sept 14 (Reuters) - World stock prices pulled back from record highs after weaker-than-expected Chinese economic data, while sterling held steady before a Bank of England rate decision later on Thursday.

Chinese real estate investment picked up last month, but factory output, fixed asset investment and retail sales in the world's second-largest economy all fell short of expectations. fell in Asia, knocking MSCI's All-Country World index .MIWD00000PUS , which tracks shares in 46 countries, off a record high hit on Wednesday, when Asian shares hit their highest since 2007 and Wall Street closed at all-time peaks.

European shares opened lower. The pan-European STOXX 600 index .STOXX dipped 0.1 percent. Banks were down 0.3 percent .SX7P .

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged down 0.1 percent. China stocks .CSI300 fell 0.3 percent and Tokyo's Nikkei index closed down 0.3 percent as the China numbers weighed on sentiment.

The main event for European currency traders is likely to be the Bank of England policy meeting. While no change in rates is expected, investors will be watching whether there is any shift in the number of rate-setters voting for a rise after a jump in inflation last month. wage growth and questions over what Brexit will mean for the economy suggest most policymakers will see the recent surge in inflation to well above the BoE's target as temporary.

Sterling held steady at $1.3208 GBP=D3 , having risen as high as $1.3329 on Wednesday. The pound was also flat at 89.95 pence per euro EURGBP= .

The dollar dipped 0.1 percent against a basket of major currencies .DXY , its recent rally pausing before U.S. inflation data which may affect investors' views on whether the U.S. Federal Reserve will raise interest rates for a third time later this year.

The dollar was marginally weaker at 110.48 yen JPY= and the euro inched down to $1.1882 EUR=

The dollar touched a 10-month low of 107.32 yen last week on worries over Hurricane Irma and North Korea but has rallied this weak as U.S. Treasury yields rose and investor appetite for risk grew.

"We view this dollar move higher as broadly a corrective move and now the question is how much the dollar can recover before the data," said Viraj Patel, an FX strategist at ING in London.

EURO HEADWINDS

The Swiss franc edged lower against the dollar and the euro CHF= EURCHF= after Switzerland's central bank said its currency was highly valued and that the situation on the foreign exchange market was still fragile. 10-year Treasury yields edged down 0.3 basis points to 2.192 percent GB10YT=RR .

Their German equivalents, the benchmark for borrowing costs in the euro zone, hit a 3-1/2-week high just shy of 0.42 percent DE10YT=TWEB .

A weaker euro, which is down 1.7 percent from 2-1/2-year highs hit against the dollar last week, could encourage the European Central Bank to bring forward plans to withdraw monetary stimulus that has crushed euro zone bond yields.

"The weaker euro has amplified the headwinds facing the bond market," said Rainer Guntermann, a strategist at Commerzbank (DE:CBKG). "With the euro off its highs, it is easier for the ECB to taper next year."

In commodity markets, copper CMCU3 fell nearly 1 percent to $6,491 a tonne on concerns about excess supply.

Oil prices held on to most of the gains racked up on Wednesday when the International Energy Agency forecast stronger global demand. Brent crude, the international benchmark, was down just nine cents a barrel at $55.06.

Gold XAU= hit its lowest in almost two weeks as the dollar held firm. The metal fell to as low as $1,318.75 an ounce before rebounding slightly to $1,323.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

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