Industrial metals turn lower as nickel shipments to China wane Bunds, Treasuries advance as global inflation outlook dims Sliding commodity prices sparked a selloff in higher-yielding assets, with mining stocks dragging down equities, while the dimming outlook for inflation boosted government bonds. From coal to zinc, raw materials are under pressure on concern the global economy is slowing. Glencore Plc fell more than 7 percent, leading European mining stocks toward the lowest close since 2009, and futures signaled U.S. shares will tumble. The longest-maturity Treasuries led gains and the yen strengthened against all of its 16 major peers. "There is a rotation back to cash and bonds today as doubts on the outlook for global growth start to gather steam in the mind of investors," said Daniel Weston, chief investment officer of Aimed Capital in Munich. "We have seen growth expectations weakening for some time, and now they seem too strong for the general markets to ignore." Prices for energy and metals have extended this year’s losses amid signs the global slowdown is deepening. The Citigroup Economic Surprise Index, which measures whether G-10 nations’ economic data are above or below analyst estimates, has dropped to a three-month low after turning negative for the first time since July last week. The Federal Reserve cited downward pressure on inflation and slowing growth in China as reasons for standing pat on interest rates last week. Commodities Industrial metals fell amid renewed concern over slowing economic expansion in China as the Asian Development Bank reduced its growth forecasts for the country, the biggest consumer. Zinc retreated 1.5 percent to the lowest since June 2010 at 10:18 a.m. in London, while nickel fell 0.8 percent as China’s imports of the refined metal slumped to the smallest in four months. Copper fell 2.5 percent. The Bloomberg Commodity Index slipped 0.9 percent. West Texas Intermediate crude dropped 2.8 percent to $45.37 a barrel after rallying 4.5 percent on Monday. Brent slid 2.1 percent to $47.89 a barrel. European coal for 2016 dropped below $50 a metric ton for the first time amid slumping demand from China. Prices have declined 25 percent so far in 2015, heading for a fifth straight year of drops in the benchmark year-ahead contract, according to broker data compiled by Bloomberg. Corn slipped 0.3 percent with soybeans down 0.4 percent. Wheat futures due in December -- which surged 2.1 percent last session on prospects dry weather over the next two weeks will hamper early crop growth in Russia and Ukraine -- fell 0.3 percent. Stocks More than 20 shares fell for every one that gained in the Stoxx Europe 600 Index, which dropped 2 percent. Volkswagen AG lost another 4.5 percent, after slumping 19 percent on Monday. Official familiar with the matter said the U.S. Justice Department is investigating the carmaker’s admission that it cheated on federal air pollution tests. Standard & Poor’s 500 Index E-mini futures expiring in December slid 1.5 percent. Several technical charts are sounding warning signals that the worst of equities turmoil may not be over. A downward sloping neckline in a head-and-shoulders pattern have formed in the Dow Jones Industrial Average. The index and the Dow Jones Transportation Average also breached the low from last October, flashing a so-called Dow Theory sell signal. Bonds Markets are also whipsawing as investors digest conflicting signals from the Fed, with a fourth official talking up prospects for higher rates in 2015 after the rate decision on Thursday. Investors now put the probability of a rate rise in 2015 at less than 50 percent, and a lecture by Fed Chair Janet Yellen later this week may offer more clues as to when and if borrowing costs will increase this year. “The Fed is clearly mindful of global disinflation pressures evident from lower commodity prices,� said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “Waning risk appetite is also providing a boost for Treasuries today.� Odds of an increase at the Fed’s next meeting in October are at 20 percent, according to fed funds futures, while the probability of an increase at the last meeting of the year, on Dec. 16, is 48.8 percent, down from 58.7 percent a week ago. European Central Bank policy makers will speak this week amid speculation that the Fed’s inaction may spur Mario Draghi and his colleagues to boost asset purchases. Government bonds rallied as the drop in commodities cooled the outlook for inflation, preserving the value of payments on fixed-income securities. Treasury 30-year bonds climbed for the third time in four days, pushing the yield four basis points lower to 2.98 percent. In the euro area, bonds received an additional boost after ECB Executive Board member Peter Praet said policy makers would “forcefully react� to defend their inflation objective. Germany’s 10-year yield dropped four basis points to 0.65 percent. The Netherlands sold three-year notes at a record-low yield of minus 0.156 percent. Currencies The yen climbed on increased demand for haven assets, adding 0.6 percent to 119.85 per dollar. It’s the best-performing major currency in the past month, with the biggest gains coming versus those of commodity-producing nations including South Africa’s rand, New Zealand’s dollar and Brazil’s real. The euro slipped 0.5 percent to 134.20 yen, and was little changed at $1.1190.

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