Europe's main stock markets fell on Thursday, mirroring earlier losses in Asia, as investors fretted that China could take new moves to dampen its booming economy.
illustration photo - sources: topnews
"Equity markets have slipped back a little as worries about further Chinese monetary tightening and rumours of a Greek debt restructuring dominate sentiment," said VTB Capital economist Neil MacKinnon.
London's FTSE 100 index of leading shares dropping by more than one per cent for the second straight day, shedding 1.82 per cent to 5,867.91 points.
In Paris, the CAC 40 dipped 0.30 per cent to 3,964.84 points and in Frankfurt the DAX slid 0.83 per cent to 7,024.27 points.
Shares began falling "following the news that China's GDP grew by a faster-than-expected 10.3 per cent in 2010, once again raising concerns that the Chinese government may impose measures to cool the economy," said David Jones, an analyst at trading group IG Index.
China's robust growth last year was the fastest annual pace since the onset of the global financial crisis.
The data fuelled expectations of a stronger Chinese currency - a change that Washington has pressed for during President Hu Jintao's high-profile US visit this week.
Meanwhile Chinese consumer price inflation in December eased from the previous month, it remained stubbornly high at 4.6 per cent despite Beijing's efforts to rein in prices, spooking investors in the region who fear further tightening measures.
"Policymakers will not claim a big victory on the fall of CPI inflation to below five percent in December," said Lu Ting, an economist at Bank of America-Merrill Lynch.
Europe's other markets were mixed. Amsterdam dropped 0.51 per cent and Swiss stocks slid 0.70 per cent.
Milan added 0.37 per cent, Madrid rose 0.76 per cent and Lisbon climbed 1.04 per cent.
Even improved data on US job losses and Morgan Stanley's better-than-expected 2010 results failed to revive the Europe's main markets in late trading, and US markets opened down, extending the prior day's pullback.
At 1700 GMT the Dow Jones Industrial Average was off 0.53 per cent to 11,823.70 while the broad-market S&P 500 index dropped 0.65 per cent to 1,280.85.
Meanwhile the tech-rich Nasdaq lost 1.34 per cent to 2,688.73.
Initial jobless claims fell to 404,000 in the week ending January 15, a drop of 37,000, continuing the downward trend in claims over the past five months.
Morgan Stanley turned in a 35 per cent increase in fourth-quarter profit to $836 million, with quarterly earnings per share 7.0 per cent higher than analyst forecasts.
"There still isn't much fire in the market's belly after the S&P 500 dropped 1.0 per cent yesterday," said Patrick O'Hare of Briefing.com.
"Incidentally, that was the first time in nearly two months that the S&P 500 declined at least 1.0 percent."
Shanghai's stock market closed down 2.92 per cent, Hong Kong fell 1.7 per cent, Tokyo dropped 1.13 per cent and Sydney lost 1.05 percent. Seoul closed 0.43 per cent lower.