Stocks fell in Asia and Europe on Thursday after China reported faster-than-expected first-quarter economic growth, and inflation fueled concern that interest rates will rise in the region’s second-largest economy. The Morgan Stanley Capital International Asia-Pacific index lost 1.4 percent. Japan’s Nikkei 225 index slid 1.7 percent, and China’s CSI 300 index plunged 4.7 percent All of the region’s markets declined.
“China will have to continue to raise interest rates to take pressure out of the economy,” said Tim Dickson, who helps manage Asian equities at Scottish Widows Investment Partnership in Edinburgh. “The concern is that the tightening will slow economic growth and affect the region. It’s also an excuse to take profit, with many markets in Asia at or near all-time highs.”
In Europe, Rio Tinto Group and Antofagasta PLC paced a decline by companies most affected by slowing demand from China, the world’s fastest-growing major economy. BP PLC slipped as Merrill Lynch & Co. recommended investors reduce their holdings in the company.
“This is the second bit of bad news on inflation we have had in the last few days,” Ben Rogoff at Polar Capital Partners in London said of China’s report. “Inflation remains the principal risk to the valuation of financial assets. It’s no surprise the market’s selling off.”
The Dow Jones Stoxx 600 index dropped 0.4 percent. The Stoxx 50 declined 0.3 percent, and the Euro Stoxx 50, a measure for the nations sharing the euro, lost 0.4 percent. National benchmarks slid in 12 of 17 Western European markets.
