(MENAFN- AFP) Resurgent worries over China's slowdown sent stocks lower, only for them to recover later Wednesday as disappointing data out of the United States rekindles hopes for a delay in a US interest rate hike.
Asian shares tumbled on data showing that China's consumer price index (CPI) inflation rate rose 1.6 percent year-on-year in September.
Along with producer prices falling by 5.9 percent year-on-year, the data was seen by investors as sign of weak growth in the world's second largest economy.
Shanghai fell 0.93 percent while Hong Kong lost 0.71 percent.
Fears of a sharp slowdown in China had sent global stock markets plunging in August, and a mini-rally was brought to a halt Tuesday on news that China's imports plunged by more than a fifth in September while exports also declined.
Tokyo meanwhile tumbled 1.89 percent, with exporters hit by a stronger yen as spooked risk-averse investors shifted into safer assets.
However, some investors drew comfort from the poor data which sparked renewed hope that Beijing could launch another round of stimulus.
The latest soft readings have raised hopes for another batch of monetary easing, following five Chinese interest rate cuts since November.
"The weak inflation data, along with other disappointing releases recently such as yesterday's trade figure, makes more monetary easing and fiscal stimulus very likely if China is to achieve something close to the 7.0 percent (GDP) growth it targeted at the beginning of the year," said analyst Craig Erlam at traders Oanda.
Early European trading was dominated by the Chinese data, but share indices began to recover in the wake of disappointing US data being seen as a sign the US Federal Reserve may hold off raising interest rates further.
- Sinking energy costs -
The Commerce Department said US retail sales edged up in September by just 0.1 percent from the previous month, and August was revised down to flat, as low gasoline prices pull down the value of sales.
Retail sales are a sign of the strength of consumer spending, which drives about two thirds of the US economy's activity.
Meanwhile sinking energy costs pushed US producer prices 0.5 percent lower in September in another sign of deflationary pressures in the economy, Labor Department data showed.
Markets have tracking economic data closely for signs when the US Federal Reserve may finally start raising interest rates given concerns about persistent low inflation and recent global volatility slowing economic growth.
"The softness of September's retail sales figures supports our view that the Fed probably isn't going to hike interest rates until early next year," said Paul Ashworth, chief US economist at Capital Economics.
That helped Wall Street push higher despite disappointing earnings from banking giant JPMorgan Chase.
The Dow Jones Industrial Average climbed 0.06 percent to 17,092.57 points, with the broad-based S&P 500 adding 0.18 percent and tech-rich Nasdaq Composite Index rising 0.37 percent.
"The Fed is certainly taking note of these developments, but it is not going to over-emphasise them," said Harm Bandholz, chief US Economist at UniCredit Research
He said the September data doesn't change UniCredit's view of overall strong consumer spending in the United States, but "it certainly does increase the downside risks to GDP growth" in the third quarter of this year.
The US data helped European stocks pare their losses in afternoon trading.
Frankfurt's DAX 30 slid 0.05 percent to stand at 10,028.14 points, while the Paris CAC 40 was off 0.14 percent at 4,636.07.
Despite news that Britain's jobless total has struck a seven-year low, London's benchmark FTSE 100 index shed 0.47 percent to 6,312.35 .
In foreign exchange trading, the euro climbed to $1.1413 from $1.1381 late on Tuesday.
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