Bernanke and growth fears send shares lower, yen up
05/23/2013| 03:33am US/Eastern
Concerns over the future of the U.S. Federal Reserve's monetary stimulus and weak Chinese factory data sent shares sharply lower and safe haven currencies like the yen higher on Thursday.
The shift from riskier assets to safer markets was triggered when Fed Chairman Ben Bernanke told a congressional committee on Wednesday the central bank could scale back the pace of bond purchases at one of its next few policy meetings.
A weak manufacturing survey from China added to investors' worries, dragging MSCI's world equity index <.MIWD00000PUS> down 1.1 percent and putting it on course for its weakest day of the month.
Japan's Nikkei share average plunged 7.3 percent, its biggest one-day percentage drop in two years.
The dollar fell to a one-week low against the yen of 101.43 yen, down over 1.5 percent before recovering to around 101.80 as some speculative buyers emerged.
"The markets now are probably correcting back, U.S. yields are lower and that's helping to pull dollar/yen back," Mitul Kotecha, head of global FX strategy at Credit Agricole, said.
In Europe, the broad FTSE Eurofirst 300 index <.FTEU3> opened with losses of around 1.2 percent with Germany DAX <.GDAXI> down nearly 2 percent as investor attention switched to flash estimates of business activity in May for the euro area.
A initial reading on the French economy showed the euro zone's second-biggest economy still mired deeply in recession.
German bond futures were gaining support from the sell-off in equities, gaining 8 ticks to 144.73 and bucking a trend in Japanese and U.S. government bond markets which saw sharp sell-offs after Bernanke's comments.
(Editing by Toby Chopra)
By Richard Hubbard