In This Article:
* Asian stocks extend global rout on growth woes
* Investors seek safety in dollar, govt bonds
* Russia's threat to halt gas supplies raises fuel prices
* Markets fret over China growth worries amid lockdowns
By Kanupriya Kapoor
April 27 (Reuters) - A global stocks sell-off extended into the Asia morning on Wednesday, as growing fears about the global economy forced investors to dump riskier assets in favour of safe havens such as the U.S. dollar and government bonds.
Financial markets, already anxious about the prospects for aggressive U.S. interest rate hikes, a spike in global inflation and the Ukraine war, were rattled this week over slowdown fears in China as Beijing stuck firm to stringent COVID-19 lockdowns.
News of Russia cutting gas supplies to Eastern Europe added to the sombre mood, sending the MSCI world equity index slumping to a 13-month low.
There was little let-up in the selling in Asia, with MSCI's broadest index of Asia-Pacific shares outside Japan down 1.1% to its lowest level since March 15. Tokyo’s Nikkei and Seoul's KOSPI index were also down sharply by 1.8% and 1.19% respectively.
Chinese blue chips were flat after falling to their lowest in two years on Tuesday and the Hong Kong benchmark fell 0.72%. Australian shares were also down 0.73%.
The catalysts for the latest declines "were yet more bellicose words from Russia over Ukraine, and the announcement that Bulgaria and Poland would see their gas supplies from Russia shut off from today," ING said in a note.
Russia, which has been demanding payments for its gas in roubles as sanctions over its invasion of Ukraine bite, said it will halt supplies to Poland and Bulgaria from Wednesday.
The move, viewed as a major escalation, sent oil and gas prices higher. Brent crude futures rose $1.11, or 1.1%, to $106.10 a barrel by 0019 GMT. U.S. West Texas Intermediate crude futures rose 84 cents, or 0.8%, to $102.54 a barrel.
China's central bank said this week it would support its economy as worries grew that Beijing's insistence on continuing with a "zero-COVID" policy would harm domestic and global growth while further intensifying supply snags.
The dollar, which hit a two-year high this week, rallied further against a basket of rival currencies to 102.34, as did gold, which edged higher to settle at $1,903 an ounce.
Safety flows have also supported the yen, which lifted away from recent lows to a one-week high of 126.96 and overnight enjoyed its best day on the struggling British pound in more than two years.
Analysts say markets worry that an expected streak of rate increases by the Federal Reserve could hurt growth just when many economies have started to recover from the pandemic-driven slumps.