European, US stocks catch Asia jitters

New York (AFP) - Fresh stimulus efforts by the Chinese government may have lifted Chinese stocks Wednesday, but the moves stoked fears elsewhere about weakening conditions in the world's second-biggest economy.

The global selloff was given further momentum by North Korea's claim that it completed a hydrogen bomb test and by another drop in oil prices that sent petroleum-linked shares tumbling.

Jack Ablin, chief investment officer at BMO Private Bank in Chicago, described the gathering conditions as "definitely a noxious blend of economic and geopolitical uncertainties."

The broad-market US index, the S&P 500, lost 1.3 percent. London FTSE-100 index ended the day down 1.0 percent, with Paris's CAC 40 falling 1.3 percent and Frankfurt's DAX 30 off 0.9 percent.

Beijing's moves to pump up the Chinese economy included the central bank cutting the value of the yuan currency for the seventh session, setting its daily reference rate at the lowest level since April 2011. The benchmark Shanghai Composite Index climbed 2.3 percent

But a note from Pantheon Macroeconomics said the yuan's latest appreciation is small compared with its gains over the last decade.

"If China is serious about restoring lost competitiveness, the yuan will have to fall much further," said Pantheon's Ian Shepherdson.

Shepherdson said uncertainty about whether China will take such a move will weigh on stocks because a much bigger devaluation "would surely be followed by attempts at competitive devaluations among China's trading partners, leaving the US dollar and American exporters stranded."

- Oil shares sink -

North Korea asserted that the "republic's first hydrogen bomb test" meant it had "joined the rank of advanced nuclear states," as North Korean state television put it.

Some nuclear experts expressed skepticism at the claim, but Wall Street analysts said the move added to anxiety in the wake of a festering conflict between Saudi Arabia and Iran that surfaced earlier this week.

Commodity sector share prices were pulled down by yet another new low point in the oil rout. Brent North Sea oil, the European benchmark, closed below $35 a barrel for the first time in more than 11 years at $34.23 a barrel, down $2.19 (6.0 percent) from Tuesday's settlement.

Oil producers fell sharply, with US giant Chevron losing 4.0 percent and smaller oil producers Apache and Anadarko Petroleum slumping 11.5 percent and 9.8 percent, respectively.

French oil-services company Technip fell 3.8 percent and London-listed miners Anglo American and BHP Billiton lost 4.5 percent and 4.9 percent, respectively.

Netflix defied the market's gravitational pull lower, surging 9.3 percent following a dramatic announcement at the Consumer Electronics Show in Las Vegas that it had launched in 130 new markets, including India.

"Today you are witnessing the birth of a new global Internet TV network," Netflix cofounder and chief executive Reed Hastings told the gathering.

Monsanto shed 1.6 percent as it announced it would cut an additional 1,000 jobs in response to weak agricultural demand. The US agricultural giant, which reported a loss of $253 million in its first fiscal quarter, now expects to cut 3,600 jobs instead of 2,600.

Japanese parts supplier Takata tumbled 7.7 percent as the head of Japan's carmakers association dismissed reports that the sector was discussing a rescue for the troubled firm. Takata is embroiled in an exploding airbag crisis linked to several deaths and scores of injuries globally.

- Key figures around 2200 GMT -

New York - Dow: DOWN 1.5 percent at 16,906.51 (close)

New York - S&P 500: DOWN 1.3 percent at 1,990.26 (close)

New York - Nasdaq: DOWN 1.1 percent at 4,835.76 (close)

London - FTSE 100: DOWN 1.0 percent at 6,073.38 (close)

Paris - CAC 40: DOWN 1.3 percent at 4,480.47 (close)

Frankfurt - DAX 30: DOWN 0.9 percent at 10,214.02 (close)

EURO STOXX 50: DOWN 1.2 percent at 3,139.32 (close)

Tokyo - Nikkei 225: DOWN 1.0 percent at 18,191.32 (close)

Euro/dollar: UP at $1.0782 from $1.0750 late Tuesday

Dollar/yen: DOWN at 118.49 yen from 119.06 yen