Asian stocks extend losses, Europe opens flat on dimmer outlook for economic growth this year

SEOUL, South Korea – Asian stock markets fell for a second day Thursday and European shares drifted as a dimmer outlook for global growth this year gave investors a reason to lock in recent gains.

The World Bank cut its 2014 growth forecast Tuesday to 2.8 per cent from the 3.2 per cent it predicted in January, citing a harsh American winter and the tensions in Ukraine. That is still faster than 2013 growth of 2.4 per cent but it means a delay in economic recovery.

The reduced forecast was the first major negative news about the global recovery in recent weeks after a series of upbeat economic reports boosted investor confidence.

Britain’s FTSE 100 was 0.1 per cent lower at 6,834.58. Germany’s DAX was up 0.1 per cent to 9,957.79 and France’s CAC 40 added 0.2 per cent to 4,564.37. Wall Street was set for a tepid start, with Dow Jones and S&P 500 futures each up 0.1 per cent.

Later in the day, investors will be focused on U.S. retail sales and weekly unemployment claims. Markets expect a slight gain in May retail sales after growth slowed in April following a surge in the previous month. Unemployment claims recently have been anchored near seven-year lows.

The escalation of violence in Iraq will likely be another factor for investors to assess this week. Al-Qaida-inspired militants are threatening to take over Iraq’s north after gaining control of Iraq’s No. 2 city earlier this week.

Earlier in Asia, Japan’s Nikkei 225, the regional heavyweight, declined 0.6 per cent to 14,973.53. The index has gained 5.5 per cent in the past month. South Korea’s Kospi lost 0.2 per cent to 2,011.65 following its central bank’s widely expected decision to leave its policy rate unchanged.

Hong Kong’s Hang Seng dipped 0.4 per cent to 23,175.02 and Australia’s S&P/ASX shed 0.5 per cent to 5,428.80.

Stocks in mainland China and Indonesia also finished lower.

The New Zealand dollar jumped to $0.8663 from $0.8612 late Wednesday after the country’s central bank raised its benchmark lending rate by a quarter point to 3.25 per cent as it tries to dampen increases in house prices.

In energy markets, benchmark U.S. oil for July delivery was up 95 cents to $105.37 a barrel in electronic trading on the New York Mercantile Exchange as data showed stockpiles in the U.S. fell more than expected last week and escalating tensions in Iraq dimmed supply outlook. The contract rose 5 cents to close at $104.40 on Wednesday.

In currencies, the euro fell from $1.3535 to $1.3525. The dollar rose to 102.08 yen from 101.99 yen.