Growth fears, China equity plunge haunts world stocks

European shares pull back ahead of ECB meeting

ECB sees interest rates unchanged at least through 2019

The currency is headed for its worst weekly decline - 1.5 percent - in over a year.

Analysts cautioned the timing of the Lunar New Year made it hard to draw a true signal from the noise but the scale of the miss was alarming. China's stock market slumped the most since October as traders interpreted a rare sell rating from the nation's largest brokerage as a sign the government wants to curb gains. The German Jan factory order data came in at -2.6 percent by missing the forecast of 0.5 percent.

The euro increased 0.4 percent to $1.1233, the first advance in more than a week.

The MSCI Emerging Market Index fell 1.3 percent to the lowest since January. The S&P 500 was down 20.54 points, or 0.75 percent, to 2,728.39.

Yet the cocktail of growth woes and dovish central banks proved a boon for bonds. The bank indicated it would keep interest rates at historic lows at least until next year and potentially indefinitely and set out a new program to offer cheap loans to euro zone banks.

The reversal came in the same week that Canada's central bank took a sudden dovish turn and dismal data from Australia to the United Kingdom instilled a sense of foreboding in markets. The European Central Bank (ECB) yesterday slashed its 2019 GDP forecast for the eurozone or euro area to 1.1 percent from 1.7 percent, sending rates down across the board, and pummeling equity markets worldwide.

US stocks, which are in the midst of a mile recovery, took a beating following the deflating news from the European Central Bank.

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The downbeat employment data pressured Wall Street benchmarks and the US dollar on Friday, which in turn boosted demand for the safe-haven asset gold.

Investors had been waiting for the jobs report to provide more clues on the state of the world's biggest economy and were surprised to learn US nonfarm payrolls increased by 20,000 last month, trailing estimates for a 180,000 increase.

The numbers are still likely to highlight the relative outperformance of the USA economy, especially against the European Union, and further encourage dollar bulls.

The US dollar index against a basket of six major currencies was little changed at 97.622. On Wednesday it cut its growth forecast for the euro zone to 1 percent from the prediction of 1.8 percent which it made just last November. The safe-harbour Japanese currency was one of the few to hold its own on the dollar at 111.40.

"Euro interest rates could be at current levels into 2021".

Gold and the dollar typically move in opposite directions.

In commodity markets, oil prices eased as US crude output and exports climbed to record highs, undermining efforts by producer club OPEC to tighten global markets.

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