Global growth concerns hit markets

Earlier in Asia,Chinas Shanghai index led the region lower following reports that China8217;s banks have had their reserve requirements increased again. Following those reports,the benchmark Shanghai Composite Index fell 75.02 points,or 2.4 per cent,to 3,019.39,its lowest since October 30,2009. 8220;It was later clarified that this was simply an implementation of an earlier decision and that no new banks had been affected,8221; said Gareth Berry,an analyst at UBS. 8220;Markets took no chances however.8221;

Investors are particularly worried about policy changes in China as the countrys growth helped limit the impact of the global recession over the last year figures last week showed that Chinas economy grew an eye-catching 10.5 per cent in the final three months of the year from the year before.

The worry is that tighter monetary policy in China to check inflationary pressures could kill off the nascent economic recovery around the world. And the economic data around the world suggests that the recovery is not on a sure footing.

Figures Tuesday showed that Britain finally emerged from recession in the last three months of 2009 after six consecutive quarters of falling output but only at a quarterly rate of 0.1 per cent as the services sector barely grew. That was way less than the 0.4 per cent consensus in the markets.

The weak growth rate hit the pound hard,pushing it down a whole cent following the data8217;s release to 1.6112,even though the figures raised eyebrows in the markets.

Meanwhile,equivalent figures in South Korea did little to excite investors fourth quarter growth there slowed to just 0.2 per cent because of weakness in manufacturing,construction and exports. The anemic economic data around the world has been one of the reasons why stock markets have come off recent highs. President Barack Obama8217;s plan to limit the size of US banks and impose restrictions on their more risky trading activities has added to the downturn in sentiment,which saw Wall Street suffer its worst week in ten months last week. Elsewhere in Asia,Japan8217;s Nikkei 225 stock average retreated 187.41 points,or 1.8 per cent,to 10,325.28 and South Korea8217;s Kospi shed 32.86 points,or 2 per cent,to 1,637.34.

In Chinese markets,the benchmark Shanghai index dropped 75.02 points,or 2.4 per cent,to 3,019.39 and Hong Kong8217;s Hang Seng sank 489.22 points,or 2.4 per cent,to 20,109.33. Taiwan8217;s index plunged 3.5 per cent.

Elsewhere,Singapore8217;s market was down 2.4 per cent and Thailand retreated 0.6 per cent. Indian and Australian markets were closed for public holidays.