* China lending moves begin, hurt stocks
* Wall Street set for poor start
* S&P cuts Japan outlook
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 26 (Reuters) - China implemented its announced
clampdown on lending on Tuesday, hitting investor confidence
about global economic recovery and sending emerging market
stocks in particular down more than 2 percent.
Standard & Poor's added to the mood by cutting its outlook
for Japan while Britain's growth was far more anaemic than
expected, albeit that it did formally exit recession.
A rising German Ifo business sentiment indicator was not
enough to dent the trend, which saw stocks falling and Wall
Street set for a poor start.
At lot of emphasis was being placed on China's
implementation of a previously announced move against lending,
with banks and commodities the major fallers in Europe.
[]
China is one of the main drivers of the global economy and
any sign it may be seeking to slow down tends to rattle markets.
"Since China has started its banking proposals ... this has
generally been seen as a concern," said Justin Urquhart Stewart,
director at Seven Investment Management.
"How do you let the air out of the balloon easily, the
answer is with difficulty ... there is a level of Chinese
uncertainty which hangs as a cloud over us."
World stocks as measured by MSCI <.MIWD00000PUS> were down
0.7 percent with their emerging market component <.MSCIEF> -- a
sector particularly sensitive to China -- down 2.1 percent.
Emerging stocks, last year's star performer with a nearly 75
percent gain, have lost more than five percent so far this year.
The pan-European FTSEurofirst <> looked past the
relatively bullish German data and was down 0.4 percent.
Earlier, Japan's Nikkei <> closed down 1.8 percent.
That was before S&P cut its outlook.
NEGATIVE JAPAN
The yen gained broadly after China's move on required
reserves for some banks, although it wobbled for a while on the
S&P report.
The ratings agency cut its outlook for Japanese debt, citing
reduced wriggle room on fiscal policy and disappointment with
the new government's budget consolidation plans. []
Higher-yielding and commodity-linked currencies tend to fall
on any hint China may be putting the brakes on its economy,
providing support to the likes of the yen.
It hit a five-week high against the dollar at 89.42 yen and
a nine-month high against the euro at 125.96 yen <EURJPY=R>.
The euro fell 0.5 percent to $1.4082 <EUR=>.
Euro zone government bonds yields were flat.
(Additional reporting by Joanne Frearson; Editing by Ron
Askew)
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