Stocks fell on Wall Street and in Europe on Friday after data showed only a slight increase in American consumer spending and an unexpected rise in European inflation.
The Commerce Department said consumer spending in August rose 0.2 percent, while incomes actually fell for the first time in two years.
The Standard Poor’s 500-stock index fell 1.5 percent in early trading. The Dow Jones industrial average fell 1.1 percent and the Nasdaq composite index lost 1.6 percent.
Consumer prices in the 17 European Union nations that use the euro rose 3 percent in September, after a 2.5 percent increase in August, the largest increase since October 2008.
Coming on the heels of data showing declining consumer confidence in Europe and evidence that the economy is slowing in much of the region, the inflation figures complicate the monetary policy challenge facing the European Central Bank, which has a primary responsibility to maintain price stability.
Still, said Ben May, an economist at Capital Economics in London, investors are right to continue expecting another move by the European Central Bank to cut interest rates by the end of 2011, noting that so-called “core” inflation, which subtracts energy and food prices because of their volatility, appeared to be well below the bank’s 2 percent target.
“What’s more, any rise is likely to prove temporary, given the recent signs that the recovery is coming to an end,” Mr. May said.
The United States Federal Reserve, the Bank of England, the Swiss National Bank and the Bank of Japan all have set their main overnight target rates at close to zero.
In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 2 percent, while the FTSE 100 index in London slid 1.8 percent. The DAX in Germany lost 2.7 percent.
American crude oil futures for November delivery fell 2.3 percent to $80.26 a barrel. Comex gold futures rose 0.1 percent to $1,616.80 an ounce.
The dollar gained against most other major currencies. The euro fell to $1.3429 from $1.3597 late Thursday in New York, while the British pound fell to $1.5547 from $1.5627. The dollar was flat against the Japanese currency, at 76.85 yen, but higher against its Swiss counterpart, rising to 0.9043 francs from 0.8971 francs.
Asian shares were mixed, with both the Tokyo benchmark Nikkei 225 stock average and main Sydney market index, the S.P./ASX 200, essentially unchanged. But the Hang Seng index in Hong Kong fell 2.3 percent and in Shanghai the composite index fell 0.3 percent.
Bond prices were mostly higher, with the yield on the benchmark 10-year Treasury note dipping 5 basis points to 1.95 percent and the yield on the German 10-year falling 10 basis points to 1.9 percent.
David Jolly reported from Paris.
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