Sensex ends 372 points lower on global cues; metal dips 4 per cent

01 Jun 2010

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The benchmark Nifty snapped four-day winning streak and closed below the psychological 5000-mark. The sell-off across global markets and fall in commodities along with currencies hammered the Sensex to shed 400 points in intraday trade.

Global markets fell and the euro slipped close to a four-year low against the dollar as expectations that slowing growth in China and the euro zone would hamper the global economic recovery hit risky assets.

European markets like CAC, DAX and FTSE were trading 2% lower on doubts of economic recovery. British Petroleum tumbled 15% after its attempt to plug a disastrous oil leak in the Gulf of Mexico failed.

Bond futures rose 50 ticks while the spreads between Italian and German 10-year government bonds yields rose as German unemployment fell faster than expected in May.

A survey showed manufacturing activity in the euro zone expanded in May at a considerably more sluggish pace than in April, while separate data showed the pace of China's factory output eased last month.

However, Qing Wang, Chief Economist for Greater China at Morgan Stanley said overall growth in China was still strong. "The PMI is indicating sequential growth momentum. GDP growth for Q1, we do believe that the Chinese economy is slowing on sequential terms. Having said that, I think May PMI is little bit exaggerating the downside risk because the typical similar patterns suggest that there will tend to be a small decline of PMI in May. No doubt the Chinese economy momentum is weakening, but overall growth is still strong," he has said.

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