* MSCI World down 1.07 pct, emerging markets down 2.46 pct
* Euro worst performing major currency, down 14 pct YTD
* Dollar index highest since March 2009
By Claire Milhench
LONDON, May 17 (Reuters) - Stocks fell and the euro slumped
to a four-year low on Monday as Asian markets caught up with
Friday's sell-off in the West, shrugging off encouraging data
and remaining fixated on troubles in the euro zone.
Shanghai stocks <> were down 5.07 percent, reflecting
the negative mood across Asia, as investors worried that
European austerity measures would stifle a recovery, affecting
Asian exports to the West.
"It is probably a good excuse for a sell off," said Mike
Lenhoff, chief strategist at wealth manager Brewin Dolphin. "We
have a recovery but it is a feeble one. If you load on to that
recovery a severe dose of fiscal austerity, the prospects then
for a sustainable recovery (are strained)."
The FTSEurofirst 300 <> index of top European shares
opened down 0.43 percent, while core euro zone government bond
futures opened nearly half a point higher as investors sought
the safety of German paper.
On Sunday, German Chancellor Angela Merkel said that a $1
trillion EU/IMF bailout plan had only bought the euro zone time
to tackle its fundamental problem -- a yawning gap between its
strongest and weakest economies [].
World stocks as measured by the MSCI All-Country index
<.MIWD00000PUS> were down 1.07 percent whilst the more volatile
emerging markets index <.MSCIEF> was down 2.46 percent.
Earlier in Japan, the Nikkei fell 2.17 percent to a 10-week
closing low, mirroring falls in the rest of the region as
investors ignored encouraging economic data from the United
States, Japan and Singapore [] []
[].
Exporters such as Canon Inc <7751.T> were hit as the
low-yielding yen rose broadly, boosted by the rise in risk
aversion, whilst China-linked shares such as Komatsu <6301.T>
were clobbered by the fall in the Shanghai index.
EURO EXTENDS LOSSES
The euro extended its losses to $1.228, down about 0.6
percent on the day, and over 14 percent lower year to date,
making it the worst performing major currency.
"The euro is a one-way trade right now and capitulation is
on my mind. I can see a move towards $1.2000 at least," said
Kenneth Broux, market economist at Lloyds Banking Group.
Sterling slid to its lowest level since March 2009 at
$1.4249 <GBP=D4> before rising back to $1.438, still down 1.01
percent on the day.
Weakness in the euro and the pound helped the dollar index
<.DXY>, which rose above 87.00, the highest since March 2009.
Bund futures <FGBLc1> opened 42 ticks higher at 123.95,
while 10-year euro zone bond yields were flat.
(Additional reporting by Blaise Robinson, Jeremy Gaunt and Neal
Armstrong; editing by Jason Webb)
