Fresh China woes knock world markets

Resurgent worries over China's slowdown sent global share prices sliding on Wednesday, with European and Asian markets sinking into the red.  

In midday deals, London's benchmark FTSE 100 index shed 0.71 percent to 6,297.50 points compared with Tuesday's close, as Chinese fears eclipsed news that Britain's jobless total has struck a seven-year low.

Frankfurt's DAX 30 slid 0.82 percent to 9,950.20 points and the Paris CAC 40 lost 0.59 percent to 4,615.80, hurt also by shrinking eurozone industrial production.

This month's global stocks rally was brought to a halt Tuesday on news that China's imports plunged by more than a fifth in September while exports also declined.

And on Wednesday official figures showed the country's consumer price index (CPI) inflation rate rose 1.6 year-on-year in September, the National Bureau of Statistics said, weaker than August's 2.0 percent.

In addition, the producer price index (PPI), measuring the cost of goods at the factory gate, fell 5.9 percent year-on-year in September, matching August's six-year low.

"Equity indices are in the red again in honour of Chinese inflation data which added to global growth worries and deflationary woes," said Mike van Dulken, head of research at trading firm Accendo Markets.

"CPI inflation lost more ground and PPI deflation made it 43 consecutive months of contraction."

In Asian trading, Shanghai shed 0.93 percent and Hong Kong lost 0.71 percent while Sydney -- where several firms that rely on Chinese trade are listed -- ended 0.11 percent down.

Tokyo meanwhile tumbled 1.89 percent, with exporters hit by a stronger yen as spooked risk-averse investors shifted into safer assets.

However, some investors drew comfort from the poor data which sparked renewed hope that Beijing could launch another round of stimulus.

The latest soft readings have raised hopes for another batch of monetary easing, following five Chinese interest rate cuts since November.

"The weak inflation data, along with other disappointing releases recently such as yesterday’s trade figure, makes more monetary easing and fiscal stimulus very likely if China is to achieve something close to the 7.0 (GDP) growth it targeted at the beginning of the year," said analyst Craig Erlam at traders Oanda.

After Eurozone industrial production fell back 0.5 percent month-on-month in August after a 0.8 percent gain in July, IHS Global Insight economist Howard Archer saw a third quarter distortion partly arising from the timing of summer holidays.

"Even so, it does look like industrial production made only a limited contribution to Eurozone GDP growth in the third quarter," Archer said.

In Wall Street action on Tuesday, a sell-off of drug company stocks put a hold on a two-week-long rally.

But beer shares got a boost from the $122 billion merger announced by Anheuser-Busch InBev and SABMiller.

New York's Dow Jones Industrial Average finished down 0.29 percent at 17,081.89.

The broad-based S&P 500 dropped 0.68 percent to 2,003.69, while the tech-rich Nasdaq Composite Index fell 0.87 percent to 4,796.61.