Chinese shares lead global retreat

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By PAN PYLAS, Associated Press

LONDON (AP) — Chinese shares led global markets lower Wednesday as investors fretted over the outlook of the world's second-largest economy and whether the U.S. economic recovery was losing its shine.

Mainland Chinese shares saw their biggest loss in almost four months following a run of disappointing U.S. economic figures, with investors worrying that weak U.S. consumer demand could add to the contraction already being experienced by Chinese manufacturers.

The benchmark Shanghai Composite Index slid 2.7 percent to 2,284.88 while the Shenzhen Composite Index dived 4.1 percent to 909.58

"Concerns about a slowdown in the Chinese economy are continuing to depress the Shanghai Composite," said Neil MacKinnon, global macro strategist at VTB Capital.

U.S. economic indicators have mostly surpassed expectations this year, particularly with regard to the jobs market, and that has supported stocks. An easing in Europe's debt crisis has also helped, though many investors remained skeptical of claims — as made by Italian Premier Mario Monti this week — that the crisis was almost over.

In recent days, the economic newsflow out of the U.S. has been fairly disappointing. The Conference Board said Tuesday its index of U.S. consumer confidence slipped in March and the Federal Reserve Bank of Richmond, Virginia reported that a measure of regional manufacturing plunged this month.

U.S. durable goods orders for February, due for release later, will be assessed in the context of the country's recovery. Durable goods are products expected to last at least three years, such as appliances, cars, machinery and airplanes. The consensus in the markets is that they grew by 3 percent in February, following a big 3.7 percent decline in January.

In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 5,855 while Germany's DAX fell 0.4 percent to 7,053. The CAC-40 in France was 0.2 percent lower at 3,462.

U.S. shares were poised for a flat opening with both Dow futures and the S&P 500 futures up 0.1 percent.

Elsewhere in Asia, Japan's Nikkei 225 index dropped 0.7 percent to close at 10,182.57, a day after the benchmark shot to a one-year high. Hong Kong's Hang Seng ceded 0.8 percent to 20,885.42 and South Korea's Kospi shed 0.4 percent to 2,031.74.

In the currency markets, the euro remained buoyant as the dollar continued to struggle in the wake of the disappointing U.S. economic news — it was trading 0.3 percent higher at $1.3363.

Oil prices tracked equities lower, with the benchmark New York rate down 90 cents at $106.43 a barrel.

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Pamela Sampson in Bangkok contributed to this report.

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