World stocks fall for third day

Stocks on Wall Street tumbled for a third day on weak economic data from China and surprisingly poor demand at a German government-bond auction.

US economic news was also disappointing, with initial jobless claims up, a decrease in durable goods orders and slower consumer spending.

However, incomes rose 0.4% in October after a 0.1% rise in the previous month.

The Dow Jones Industrial Average was down 236.17 points, or 2.0%, to 11,257.55 at the close (10am NZ time). The Dow is now at a six-week low having lost 4.6% this week.

Leading the losses were materials, financial and energy stocks. Bank of America, Alcoa and Hewlett-Packard each lost 3% or more.

The S&P 500 index was down 2.2% to 1161.79 and the Nasdaq Composite was down 2.4% to 2460.08.

Other markets: Europe, Asia down
The lack of demand at Germany's auction of new 10-year government bonds brought the eurozone's debt fears closer to the core of the region. The disappointing demand lifted yields on Spanish and French government bonds as well.

The Stoxx Europe 600 closed down 1.3% at 220.31, its fifth consecutive drop, though the losses were limited by a better-than-expected reading of the Purchasing Managers Index for November.

The UK's FTSE 100 closed 1.3% lower at 5139.78. This was the eighth consecutive losing trading day for the index, just one day short of the longest losing session since 2003.

Germany's DAX fell 1.4% to 5457.77 and France's CAC-40 closed down 1.7% at 2822.43.

Most Asian sharemarkets ended with sizable losses after poor manufacturing data from China added to worries about global growth.

The preliminary HSBC China Manufacturing Purchasing Managers Index fell to 48.0, which implies a contraction.

Hong Kong's Hang Seng Index fell 2.1% to 17,864.43 and China's Shanghai Composite Index swung from mild gains to finish down 0.7% at 2395.06.

The Australian S&P/ASX 200 index ended down 2% at 4051.0, while Korea's Kospi fell 2.4% to 1783.10. Japan's markets were closed for a holiday.

Commodities: Oil, gold down
Crude-oil futures remained lower, even after a report showed US oil inventories dropped last week as refineries raised their output.

Light, sweet crude for January delivery was down $US2.06, or 2.1%, to $US95.95 a barrel in New York. Brent crude on ICE Futures Europe lost $US2.12, or nearly 2%, to $US106.91 a barrel.

Gold eased below $US1700 an ounce as investors moved to cash. The contract for November delivery fell $US6.50, or 0.4%, to settle at $US1695.70 an ounce in New York. The contract touched a low of $US1681.60 during the session.

Currencies: Euro tumbles on German bond shock
The euro tumbled against the US dollar, falling to $US1.3333, near a two-month low, from $US1.3505 late on Tuesday in New York.

This followed a shockingly poor German government bond auction in which only €3.6 billion of the €6 billion in 10-year benchmark bonds on offer were sold.

The dollar was at ¥77.41, up from ¥76.97 late on Tuesday. The dollar was at 0.9202 Swiss franc, from 0.9141 franc, and the UK pound was at $US1.5509, down from $US1.5634.