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June 23, 2017

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Global stocks dip ahead of European growth data

SEOUL/ HONG KONG--Global stock markets were mostly lower Thursday ahead of quarterly European growth figures that investors hope will show a strengthening economic recovery.

European stocks turned lower after briefly trading in positive territory. Germany's DAX was down 0.1 percent to 9,743.35 and France's CAC 40 declined 0.3 percent to 4,488.09. Britain's FTSE 100 edged down 0.1 percent to 6,869.46.

Wall Street appeared set for losses, with the Dow and S&P 500 futures contracts both down 0.1 percent and the Nasdaq lost 0.72 percent following the inflation data and a mixed bag of earnings reports.

Investors are waiting for European growth figures later in the day. A survey of analysts by financial data provider FactSet forecasts that the eurozone economy grew 0.4 percent from the previous quarter, a figure that would confirm Europe's recovery from recession has gathered pace.

Even then, markets are expecting the European Central Bank to deliver stimulus measures at its June 5 meeting to keep the region's recovery from going into reverse. But those hopes failed to stoke investor appetite for risky assets.

Asian stocks were mixed Thursday, with a stronger yen and a slump in Sony shares pushing Tokyo's Nikkei lower despite data showing the Japanese economy accelerated in the first quarter.

Tokyo slipped 0.75 percent, or 107.55 points, to finish at 14,298.21, Sydney added 0.26 percent, or 14.3 points, to 5510.8 and Seoul was flat, edging down 0.63 points to 2,010.20.

Shanghai sank 1.12 percent, or 22.94 points, to 2,024.97 while Hong Kong added 0.66 percent, or 148.09 points, to 22,730.86.

Japan's Cabinet Office said Thursday the world's number-three economy grew 1.5 percent on-quarter in January-March, sharply higher than the previous three months thanks to a rush by shoppers to beat an April 1 sales tax hike.

That compares with revised growth of 0.1 percent in October-December and is much better than the 1.1 percent forecast by market-watchers.

It also represents the sixth consecutive quarter of growth for Japan and is the fastest since July-September 2011, when the economy picked up from the effects of the quake-tsunami disaster.

Prime Minister Shinzo Abe has pushed big government spending and monetary easing as the solution to conquer years of deflation and tepid growth, which has in turn sent the yen plunging, giving a boost to exporters.

But critics fear the sales tax hike — seen as crucial for slashing Japan's massive national debt — will dent a nascent economic recovery. "The economy will certainly contract in the second quarter of the year, as consumers rein in spending after the tax hike, and residential investment is set to plunge," said Marcel Thieliant, a Japan economist for Capital Economics.

"But forward-looking business surveys ... point to a rebound in the second half of the year."

Also in Tokyo, Sony shares dived 6.09 percent after the electronics giant warned that it would remain in the red for another year, following a US$1.26 billion annual loss.

Gold fetched US$1,305.46 an ounce at 1115 GMT compared with US$1,303.17 late on Wednesday.

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