By Stephen Kirkland and Clyde Russell June 29 (Bloomberg) -- Stocks and U.S. index futures plunged, Treasury two-year note yields dropped to a record low and the yen strengthened on concern that growth in China, the main engine of the world’s economic recovery, is slowing. The MSCI World Index of 24 developed nations lost 1.1 percent at 10:35 a.m. in London, driving the yield on the benchmark 2012 note to 0.59 percent and the 10-year yield below 3 percent for the first time in 14 months. China’s Shanghai Composite Index slumped 4.3 percent, the most in six weeks. Futures on the Standard & Poor’s 500 Index slid 1.3 percent. “If the bond market is correct then this recovery could be dead in the water,” said Jim Reid, the head of fundamental strategy at Deutsche Bank AG in London. The Conference Board’s leading economic index for China, which overtook Germany as the world’s biggest exporter last year, rose 0.3 percent in April, less than the 1.7 percent reported June 15. The data damaged investor confidence amid concern a Labor Department report July 2 will show the U.S. lost jobs for the first time since December while European banks’ balance sheets come under renewed scrutiny. All 10 industry groups in the MSCI World gauge declined, led by basic-materials producers. The index has lost 8.3 percent this year. The MSCI Asia Pacific Index dropped 1.6 percent today as Japan’s unemployment rate unexpectedly increased. Confidence, Employment Futures on the S&P 500 expiring in September slid 1.3 percent, indicating the benchmark gauge for U.S. stocks will decline for the sixth time in seven days. Reports today may show U.S. consumer confidence fell from a two-year high and home prices rose as sales got a boost from a tax credit, according to Bloomberg surveys of economists. The two-year Treasury note yield declined three basis points, and the yield on the 10-year security slid five basis points to 2.97 percent, the lowest since April 2009. Treasuries have climbed 5.7 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. The 10-year Australian bond yield dropped nine basis points to 5.14 percent, and the yield on the German bund retreated five basis points to 2.53 percent. The yen appreciated to 107.82 per euro, the strongest level since November 2001, while the 16-nation European currency weakened 0.6 percent against the dollar to $1.2191, falling for the second consecutive day. The Swiss franc strengthened to less than 1.33 per euro for the first time amid speculation the nation’s central bank won’t intervene to curb its appreciation. Copper, Oil Decline Metals declined for the first time in four sessions on the London Metal Exchange, led by a 4.5 percent drop in zinc. Copper fell 4.1 percent, extending its decline this year to 11 percent. Gold fell 0.5 percent to $1,233.23 an ounce, paring this year’s gain to 12 percent. Crude oil for August delivery slumped 2 percent to $76.66 a barrel on the New York Mercantile Exchange, bringing its decline to 3.4 percent this year. The MSCI Emerging Markets Index fell 1.9 percent, the most since June 7, extending this year’s drop to 5.6 percent. Benchmark indexes in Russia, the world’s largest energy supplier, Indonesia, Egypt, Ukraine and Romania lost more than 2 percent. The New York-based Conference Board cited a calculation error for the revision in its Chinese index. The research group’s outlook for the nation’s economy hasn’t been affected by the correction, said William Adams, the group’s resident economist in Beijing. Moderating Growth “Growth was not likely to accelerate in China, and in fact, a moderation is possible,” Adams said in a telephone interview. “This correction also supports the same view.” The Stoxx Europe 600 Index tumbled 1.8 percent as Rio Tinto Group, the world’s third-biggest mining company, plunged 5.6 percent on concern demand from China may weaken. BP Plc slid 2.7 percent, bringing its decline since an April explosion on the Deepwater Horizon rig to more than 50 percent. The cost of insuring BP’s debt approached a record, with credit-default swaps increasing 3.5 basis points to 587.4, according to CMA DataVision, a London-based credit information provider. The contracts closed at an all-time high of 588.6 on June 25. ----With assistance from Claudia Carpenter, Andrew Rummer, Michael Shanahan and Daniel Tilles in London. Editors: Stephen Kirkland, Justin Carrigan. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; To contact the editor responsible for this story: Paul Sillitoe in London at

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