US and European stocks fell yesterday after weak Chinese and Japanese data stoked worries about slowing global economic growth, while oil prices sank to five-year lows on expectations of oversupply into 2015.

The euro sagged to two-and-a-half-year lows against the dollar after European Central Bank policymaker Ewald Nowotny’s warned of a “massive weakening” of the eurozone economy and said the purchase of state bonds could provide a boost. His comments came just days after Standard and Poor’s downgraded its credit rating on Italy, the bloc’s third largest economy, to a level just above junk status.

Nowotny’s remarks raised bets in the bond market for a fresh round of ECB stimulus in the first quarter of 2015.

Data out of Asia also took a toll on sentiment. Japan reported its third-quarter economic contraction was deeper than previously thought, while China’s unexpectedly weak import data signaled slowing demand in the world’s second biggest economy.

The disappointing economic developments abroad overshadowed Friday’s robust US jobs report, which revived bets the Federal Reserve might consider ending its near-zero interest rate policy in mid-2015.

Even so, Wall Street stocks proved to be fairly resilient.

In early US trading, the Dow Jones industrial average fell 5.52 points, or 0.03 per cent, to 17,953.27, the S&P 500 slipped 0.88 point, or 0.04 per cent, to 2,074.49, and the Nasdaq Composite shed 9.00 points, or 0.19 per cent, to 4,789.75.

The FTSEurofirst 300 fell 0.6 per cent to 1,396.79, while Toyko’s Nikkei eked out a 0.08 per cent gain.

The MSCI world equity index, which tracks shares in 45 nations, fell 1.21 points, or 0.28 per cent, to 423.54.

In the currency market, the euro fell to a more than two-and-a-half-year low against the greenback at $1.2247 before rebounding to $1.2292 in US trading.

The dollar also retreated against the yen and other major currencies as traders booked some profits on the greenback’s recent gains linked to expectations the Federal Reserve might raise interest rates sooner in 2015 than had been expected.

The dollar was down 0.5 per cent at 120.80 yen.

Bets on a fresh round of ECB stimulus in the first quarter of 2015 helped boost the prices of US and German government bonds. Benchmark 10-year US yields fell 2.29 per cent and 10-year Bund yields declined to 0.72 per cent .

In the energy market, Brent crude fell more than $2 a barrel to a five-year low of $66.35 on predictions that oversupply would keep building until next year after Opec decided not to cut output.

Spot gold prices edged up 0.07 per cent at $1,192.44 an ounce on some safe-haven demand on the modest losses in US and European equity prices.

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