World share and commodity prices fell on Monday as the recent run of downbeat corporate earnings cast a shadow over the growth outlook and investors braced for the impact of a giant U.S. hurricane.
Activity across all markets was expected to be thin as the Category 1 Hurricane Sandy neared landfall along the mid-Atlantic states of the United States, forcing shops, offices and share markets in New York to close.
The MSCI world equity index <.MIWD00000PUS> was down 0.25 percent at 327.80 points and is on track for its worst monthly performance since May as doubts grow over the effect of recent central bank efforts to boost activity.
Positive economic surprises, including third-quarter U.S. and British growth data and signs of stability in China, have yet to reassure investors that growth is on a sustainable path in the face of weak revenue outlooks from major companies.
"Corporate earnings are still weighing on sentiment," said Adrian Slack, head of equities at Bastion Capital.
The FTSE Eurofirst 300 index <.FTEU3> of top European shares followed Asian markets lower, dropping 0.45 percent to 1092.31 points. London's FTSE 100 <.FTSE>, Paris's CAC-40 <.FCHI> and Frankfurt's DAX <.GDAXI> were all down between 0.5 and 0.8 percent. <.L> <.EU>
In Europe, the problems facing the heavily indebted nations of Spain, Greece and Italy have added to investor concerns, undermining the euro and peripheral bond markets.
Spain's economic woes appear to be deepening, with retail sales in September falling at the fastest pace in at least six years as already battered consumer confidence took another hit from a hike in sales tax.
In Greece uncertainty is growing over whether it can agree measures to unlock further funds from its international bailout package before cash runs out in mid-November [ID:nL5E8LS26I]
In Italy political risks were on the rise again after former premier Silvio Berlusconi threatened to bring down the current government of Prime Minister Mario Monti over its current economic policies.
"Berlusconi's rant perhaps highlights the less than stable nature of Italian politics and reinjects some degree of political risk into (Italian government bonds)," said Richard McGuire, rate strategist at Rabobank.
The single currency was down 0.4 percent at $1.2895, not far from a two-week low of $1.2882.
Spanish 10-year government bond yields were 6 basis points higher at 5.67 percent, with the Italian equivalent up 7 basis points at 4.98 percent.
German government bonds also hit two-week highs as the weakness on equity markets added to the demand for less risky assets.
Meanwhile, the dollar steadied at 79.63 yen, off a four-month high of 80.38 yen touched on Friday, ahead of the Bank of Japan's policy decision on Tuesday. Markets expect the BOJ to take further easing measures.
If the BOJ does ease, it will be the first time the central bank has acted for two consecutive months since 2003.
In oil markets all eyes were on Hurricane Sandy, which has forced the closure of several big refineries along the east coast of the United States.
"With refineries cutting runs, we're likely to see a build-up in crude stocks which could be driving bearish prices at the moment," said Michael Creed, an economist at National Australia Bank in Melbourne.
Brent crude oil fell $1.04 to $108.51 a barrel, while U.S. crude
The hurricane could also hit economic activity along the eastern seaboard of the United States, including New York, adding to worries about the fragile nature of the U.S. recovery.
Commodities were also pressured by fears that rising evidence of weak corporate earnings around the world meant demand would slow, with London copper falling to its lowest level since September 7 at $7,755 a metric ton.
(Additional reporting by Anirban Nag and Kirsten Donovan; Editing by Will Waterman)