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Shares fall on growth worries, Aussie tumbles

NEW YORK - Global stocks slipped on Tuesday and the U.S. dollar dropped to a two-and-a-half month low against the Japanese yen as worries about the U.S. economy and Europe overshadowed signs of recovery in China’s vast factory sector.

Wall Street stocks opened little changed ahead of data on the U.S. manufacturing sector, with any sign of weakness likely to increase talk of further monetary easing by the Federal Reserve.

The Australian dollar fell more than 1 percent against its U.S. counterpart after the Reserve Bank of Australia slashed rates by a deeper-than-expected 50 basis points and left the door ajar for further easing. Domestic government bond yields hit 60-year lows.

Trading activity was limited with many markets in Asia and Europe closed for the May Day holiday.

The MSCI’s world equity index fell 0.1 percent to 328.26, adding to losses of about 1.5 percent in April.

The Dow Jones industrial average was up 3.63 points, or 0.03 percent, at 13,217.26. The Standard & Poor’s 500 Index was up 1.61 points, or 0.12 percent, at 1,399.52. The Nasdaq Composite Index was up 6.79 points, or 0.22 percent, at 3,053.15.

Worries about the global economy resurfaced after recent data showed U.S. economic growth cooled in the first quarter and the euro zone recession is deepening.

The weakness has also spread to other countries as the British manufacturing sector barely grew in April, hit by the economic slowdown in the euro zone, while Canada said its economy unexpectedly shrank in February.

Signs of recovery in Chinese manufacturing helped cushion the fall in share prices. China’s Purchasing Managers’ Index (PMI) rose to a 13-month high in April, suggesting the world’s second-largest economy has found a footing and may be recovering from a first-quarter trough.

The FTSEurofirst 300 index of top European shares was little changed at 1,043.74. Emerging market shares slipped 0.1 percent.

Against the yen, the dollar fell to a low of 79.62, its weakest point since February. The stronger yen hit Japan’s export-related equities, sending the Nikkei index to a 2-1/2 month closing low.

In the commodities market, Brent crude was trading near $119 a barrel while U.S. crude eased 11 cents to $104.76.

Copper traded near $8,400 a tonne after rising to its highest level in nearly a month on Monday. Gold inched up to a two-week high, supported by weakness in the dollar.

The benchmark 10-year U.S. Treasury note was up 4/32, with the yield at 1.905 percent.