US markets

U.S. stocks are lower Thursday, with the Dow Jones Industrial Average dipping in and out of negative territory as investors fret that stronger-than-expected growth in China would lead to more policy measures to cool its economy. Stocks may be getting somewhat of a boost as Treasurys sell off, but the odds of a correction are building, and the risk trade remains under pressure. The Dow Jones Industrial Average is down 0.04%, or 4.95 points, at 11820. The Nasdaq Composite is down 0.5% at 2710.79, and the Standard & Poor's 500 index has shed 0.06% to 1281.

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Caterpillar was the Dow's worst performer, falling 1.6% after the heavy-equipment company said it has received requests from the Justice Department for additional information about its proposed $7.6-billion acquisition of Bucyrus International, a mining-equipment company. With 11 plants in China, Caterpillar could also be squeezed by further tightening in China, investors worried. Concerns over a cooling Chinese economy also dented aluminum giant Alcoa, which fell 1.6%. Energy giants Exxon Mobil and Chevron were hurt by similar fears for their product demand; Exxon Mobil fell 1.1% and Chevron slipped 0.8%. Boeing was also weak, off 1%, after the aerospace and defense giant said it plans to cut about 1,100 jobs through the end of next year as it pares production of a line of transport aircraft.

European markets

Most European bourses dropped Thursday as worries about further policy tightening in China hit mining and auto stocks, though peripheral markets got a boost from hopes that the euro-zone bailout fund could be strengthened. The Stoxx Europe 600 index declined for the second straight session to close down 1.2% at 279.39. Disappointing updates from several European companies exacerbated the selling pressure. The decline in Europe followed a weak session for Asian markets, where strong growth figures from China underscored perceptions that Beijing will need to further tighten monetary policy. Sectors with significant exposure to China ranked as the weakest performers in Europe. Mining stocks slumped across the board, including a 5.1% drop for Xstrata PLC and a 5.2% fall for Kazakhmys PLC.

London's FTSE 100, which contains several heavyweight mining stocks, was the worst performer among the major indexes, closing down 1.8% at 5,867.54. The auto sector, which has benefited from strong growth in China and other emerging markets, also struggled. German car makers Volkswagen AG fell 2.8% and Daimler was down 3%. In Italy, Fiat SpA dropped 3.6% after J.P. Morgan Cazenove downgraded the stock to underweight from neutral.The German DAX 30 index fell 0.8% to 7,024.27 and the French CAC 40 slipped 0.3% to 3,964.84. The peripheral markets outperformed Europe's main indexes. Italy's FTSE MIB index rose 0.4%, helped by a 2.2% increase for UniCredit SpA. Spain's IBEX 35 index advanced 0.8%, boosted by a 1.4% rise for Banco Bilbao Vizcaya Argentaria. The Greek ASE Composite rose 2.6%, extending a 4.5% surge Wednesday.

Asian markets

Asian markets came under renewed selling pressure Thursday, led by Shanghai and Hong Kong stocks, after Chinese data underscored Beijing's need to tighten monetary policy to rein in price pressures. The data weighed on regional shares on a day when financial stocks were already weak in some markets after Wall Street retreated Wednesday, after disappointing earnings from big U.S. banks, including Goldman Sachs Group Inc. The Shanghai Composite index tumbled 2.9%, Hong Kong's Hang Seng index shed 1.7%, Japan's Nikkei Stock Average dropped 1.1% and South Korea's Kospi declined 0.4%. Taiwan's main index lost 0.7%. China's gross domestic product rose 9.8% in the fourth quarter from a year earlier, exceeding forecasts for 9.2% growth in a Dow Jones Newswires poll. The nation's consumer-price index rose 4.6% in December, below an expected 4.7% rise, and slowing from November's 5.1% rise.

But several economists highlighted the need for more policy tightening--including the case for an imminent interest-rate increase--to check consumer prices and cool economic growth. While Chinese stocks fell across the board, metals, airline and real-estate stocks were hit especially hard. Jiangxi Copper lost 5.9% and Poly Real Estate Group tumbled 6.3%, while China Southern Airlines Co. shed 7.5% in Shanghai. In Hong Kong, Jiangxi Copper fell 2.5% and China Southern lost 6.1%, while Agile Property Holdings skidded 3.6%. Also in Hong Kong, shares of Cathay Pacific Airways tumbled 3.7% after Royal Bank of Scotland downgraded the stock to sell from buy. In Tokyo, exporters were also weaker, with Canon dropping 2.3% and Toyota Motor falling 1.2%.

Base metals

Base metals closed mostly lower on the London Metal Exchange Thursday after fears over further monetary tightening in China prompted a spate of long liquidation. The metals tumbled amid a commodity-wide pullback, with oil, precious metals and agricultural commodity markets, including coffee, sugar and grains, also taking a hit. LME three-month copper, which had only hit a new record of $9,781 a metric ton early Wednesday, closed the session at $9,355/ton--down 2.2% on the day and 4.4% on the all-time high. A strengthening of the dollar against the euro helped to drag the markets lower.

Crude-oil futures fell Thursday after the U.S. government said oil supplies rose sharply last week. Light, sweet crude oil for February delivery settled $2 lower at $88.86 a barrel on the New York Mercantile Exchange. Crude-oil inventories rose 2.6 million barrels during the week ended Jan. 14, according to the U.S. Department of Energy. Stocks of gasoline rose 4.4 million barrels, while supplies of distillates, including heating oil and diesel, added one million barrels. Gold futures fell to a two-month low as stronger-than-expected U.S. jobless figures dimmed the metal's allure as a refuge. Thinly traded gold for January delivery lost $23.70, or 1.7%, to settle at $1,346.50 a troy ounce, its weakest close since Nov. 17. The most actively traded gold contract, for February delivery, also fell $23.70 to $1,346.50.

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