''World shares felled and the dollar strengthened on Monday, as investors waited for key U.S. data this week after a decent reading on China manufacturing and some mixed euro zone PMIs.
Sterling hit a five-year high as optimism about Britain's recovery heightened expectations interest rates would soon rise from their record low.
It was a nervy start to the week on a number of fronts. Investors had plenty of possible excuses to put a lid on world stock markets and halt 8 straight weeks of gains on Wall Street.
Geopolitics got most of the headlines. Upheavals in Ukraine and Thailand escalated over the weekend. Tension grew between China and Japan over disputed islands in the South China Sea.
A decent reading on China manufacturing helped anchor Asian stocks, but Europe suffered turbulence early on. Stock markets lurched into the red and the euro backslid after gaining in Asia.
Buoyant demand for manufactured goods drove euro zone factory activity to accelerate at its fastest pace in over two years last month. But growth was still weak, and Markit, which compiles the Purchasing Managers' Indexes, said evidence of a renewed downturn in France and Spain - as well as firms cutting staff - was disappointing.
Britain's FTSE 100,Germany's DAX and France's CAC 40 all opened higher but were soon nursing losses. Milan and Madrid suffered the most, tumbling 1.3 and 0.9 percent.
Debt markets told a similar story. Bonds from core euro zone countries such as Germany and the Netherlands lost ground. So did those from Italy and Spain, both countries on the periphery.
Source: Reuters
