Global stocks struggle on rate fears

The possibility of another Federal Reserve interest rate hike has dented market optimism (Anna Moneymaker)
The possibility of another Federal Reserve interest rate hike has dented market optimism (Anna Moneymaker)

Stock markets wavered on Thursday, weighed down by concerns about China's economy and fears of more US interest-rate hikes.

Apple shares tumbled for a second straight session on reports that China was banning central government officials from using iPhones at work.

A recent spate of solid US economic statistics has translated to worries that the Federal Reserve will continue to lift interest rates. Data Thursday showed new claims for US unemployment benefits came in at the lowest weekly level since February at 216,000.

"That is really good news -- economically speaking -- but it is also news -- monetary policy speaking -- that will likely keep the Fed in a restrictive policy position for longer," said market analyst Patrick O'Hare at

The Fed has already hiked interest rates 11 times since March last year to control runaway inflation, raising its key lending rate in July to its highest level for 22 years.

John Williams, head of the Federal Reserve Bank of New York, said while inflation has been "moving in the right direction," policymakers have not ruled out additional hikes.

"Do we need to maybe raise rates again to make sure that we're keeping that steady progress in terms of shrinking imbalances in the labor market, and bring inflation back down?" Williams said.

While the Dow eked out a gain, both the S&P 500 and Nasdaq fell again.

Europe's main stock markets closed mixed, with data showing slight economic growth in the eurozone helping contain losses.

The eurozone economy eked out 0.1 percent growth in the second quarter, official data showed, but this was weaker than the prior estimate of 0.3 percent.

The European Union's Eurostat data agency also revised its first-quarter figures, saying the economy grew 0.1 percent and did not stagnate as previously thought, but commentators say the outlook is still weak.

Asian equities sank, with sentiment also hammered by data showing China's exports and imports plunged again in August, sparking slowdown fears and sending the onshore yuan to a 16-year dollar low.

The disappointing yet expected trade figures add to growing pressure on authorities to introduce fresh stimulus for the world's number two economy even as the data showed some sign of improvement.

Oil prices dipped after having jumped higher following announcements earlier this week by Russia and Saudi Arabia they are extending production cuts through the end of the year.

"Crude oil prices appear to have topped out for the time being as concerns over weak economic activity bump against the prospect of tighter output restrictions," said market analyst Michael Hewson at CMC Markets UK.

- Key figures around 2040 GMT -

New York - Dow: UP 0.2 percent at 34,500.73 (close)

New York - S&P 500: DOWN 0.3 percent at 4,451.14 (close)

New York - Nasdaq: DOWN 0.9 percent at 13,748.83 (close)

London - FTSE 100: UP 0.2 percent at 7,441.72 (close)

Frankfurt - DAX: DOWN 0.1 percent at 15,718.66 (close)

Paris - CAC 40: FLAT at 7,196.10 (close)

EURO STOXX 50: DOWN 0.4 percent at 4,221.02 (close)

Tokyo - Nikkei 225: DOWN 0.8 percent at 32,991.08 (close)

Hong Kong - Hang Seng Index: DOWN 1.3 percent at 18,202.07 (close)

Shanghai - Composite: DOWN 1.1 percent at 3,122.35 (close)

Euro/dollar: DOWN at $1.0701 from $1.0727 on Wednesday

Dollar/yen: DOWN at 147.25 yen from 147.66 yen

Pound/dollar: DOWN at $1.2474 from $1.2507

Euro/pound: FLAT at 85.76 pence

West Texas Intermediate: DOWN 0.8 percent at $86.87 per barrel

Brent North Sea crude: DOWN 0.8 percent at $89.92 per barrel