Weak European indicators spark market retreat

LONDON Global stocks drifted lower on Wednesday as weak economic indicators out of Europe encouraged investors to take a breath after a remarkable market rally over the past week.

Official statistics showed that industrial production across the 17-country eurozone fell by 0.4 percent in January, worse than analysts' predictions for an unchanged reading. Both Germany and France, the two industrial powerhouses in the region, registered drops in production, suggesting the sector is contributing to keeping the eurozone in recession.

"January's fall in eurozone industrial production is a timely reminder that, despite the improvement in business and financial market sentiment, the region is likely to have remained in recession in the first quarter," said Ben May, analyst at Capital Economics in London.

The news was enough to make investors, many of whom have been riding stock indexes to multi-year highs, cash in on gains.

By midday in Europe, Britain's FTSE 100 was down 0.8 percent at 6,457.11 while Germany's DAX lost 0.2 percent to 7,950.71. France's CAC-40 fell 0.4 percent to 3,823.79. The euro, meanwhile, fell 0.3 percent to $1.2996.

In New York, the Dow looked set to snap an eight-day winning streak that has brought it to record closing highs. Dow Jones industrial futures were down 0.2 percent to 14,364 while the broader S&P 500 futures slipped the same rate to 1,543.60.

Later in the day, investors will monitor U.S. retail sales data for February, with analysts expecting a monthly increase of about 0.6 percent. Consumer spending accounts for about three quarters of economic activity in the U.S. the world's largest economy, making it a key driver and indicator of global growth.

Stock market losses began earlier in Asia, where Japan's Nikkei 225 index fell 0.6 percent to close at 12,239.66 after the yen stopped dropping, with the dollar down 0.4 percent against the Japanese currency, at 95.67.

The yen has been weak against other currencies in recent weeks because of expectations of monetary easing by the Bank of Japan under the leadership of its incoming chief, Haruhiko Kuroda.

Kuroda has been critical of the central bank's policies in the past and is thought to back Prime Minister Shinzo Abe's strategies for seeking to revive Japan's economy by fighting deflation through monetary easing and hefty government spending.

South Korea's Kospi rose 0.2 percent to 1,997.69. Australia's S&P/ASX 200 lost 0.5 percent at 5,092.40.

Hong Kong's Hang Seng shed 1.5 percent to 22,556.65. Stocks in mainland China also fell. The Shanghai Composite Index tumbled 1.4 percent to 2,253.74. The smaller Shenzhen Composite Index lost 1.9 percent at 918.10.

Analysts said investors were having a second look at China's economy and whether future growth can match past performance. The latest Chinese data, including retail sales and manufacturing, was below expectations, he said.

"At the end of the year, the market was expecting accelerating growth in mainland China. Market sentiment was pretty high," said Linus Yip, strategist at First Shanghai Securities in Hong Kong. "Right now, we don't say it is slowing down in mainland China, but maybe stable growth."

In commodity markets, the benchmark contract for crude oil for April delivery was up 19 cents to $92.73 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 48 cents to close at $92.54 per barrel on the Nymex on Tuesday.