China, Europe drag world stocks lower; dollar slips

LONDON — Europe and Asia dragged world equity markets lower on Monday as concerns about slower growth in China prompted investors to cut their risks.

The dollar slipped against major currencies after expectations for continued monetary support from the Federal Reserve kept the benchmark 10-year yield near last month's six-month low.

Shanghai shares hit a three-week low as Beijing unveiled new regulations that tighten its grip on interbank lending to defuse risks among "shadow" non-bank financial firms that act like banks. Fresh data also added to evidence of a cooling property market.

"Markets think any weakness (in the Chinese economy) from here will be met with policy response from the authorities," said Manik Narain, strategist at UBS. "But there is room for China to disappoint so far. Weakness has been limited."

The benchmark MSCI world equity index .MIWD00000PUS fell 0.1 percent while European shares .FTEU3 lost 0.4 percent.

Emerging stocks .MSCIEF outperformed their developed counterpart by rising 0.3 percent, approaching last week's 6-1/2 month high.

The dollar fell 0.1 percent .DXY against a basket of major currencies while the euro ticked higher.