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China stocks notch up biggest daily drop since pandemic

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Finance ministry calls news conference for Saturday

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Wall Street set to open down slightly

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European shares eke out slim gains

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Defensive sectors in demand in Europe

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Dalian iron ore, Shanghai copper under pressure

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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

(Updates prices)

By Tom Wilson

LONDON, Oct 9 (Reuters) - China's runaway markets rally

stumbled on Wednesday, with stocks falling and commodities

struggling to find a footing as investors tempered hopes for a

robust Chinese economic recovery, keeping pressure on shares

globally.

Benchmark share indexes in China notched up their biggest

daily losses since the COVID-19 pandemic began, with Shanghai

stocks and the blue-chip gauge closing down

over 6% and 7% respectively, snapping a 10-day winning streak.

China's surging markets turned suddenly fragile on Tuesday,

with stocks paring gains and oil and metals prices falling, when

a news conference by China's National Development and Reform

Commission yielded no major new stimulus details.

The MSCI world equity index, which tracks

shares in 47 countries, was flat.

Wall Street, meanwhile, was set to open slightly down, as

investors awaited the release of minutes from the Federal

Reserve's last meeting for insight into the interest-rate path.

S&P and Nasdaq futures gauges were both down

about 0.2% at 1047 GMT. U.S. indexes had closed higher on

Tuesday, with tech stocks leading the gains.

Investor attention will now turn to a news conference by

China's finance ministry scheduled for Saturday, which will

detail plans on fiscal stimulus to boost the economy, signalling

more forceful policies to revive growth.

Markets are looking for a spending package between 2

trillion and 10 trillion yuan ($280 billion to $1.4 trillion).

Nick Ferres, chief investment officer at Vantage Point Asset

Management, said support needed to top previous commitments and

boost GDP by about 2 percentage points to be helpful.

Still, other market players said there were some reasons for

optimism.

"If you take the whole picture, you still see a trend, which

is domestic stocks are faring a bit better - an indication for

foreign investors that the stimulus is good news for China's

economy," said Alexandre Marquis, senior portfolio manager at

asset manager Unigestion.

The uncertain mood spilled into European trading, with the

continent's main stocks index squeezing out gains of

0.2%.

The utilities, healthcare and real estate

sectors, all considered as a safer bet during times of

uncertainty, were in demand.

Commodities, the fate of which are tied to China's economy,

were also under pressure.

Dalian iron ore and Shanghai copper posted losses, while

Brent crude futures, which fell 4.6% overnight, were

last down 0.4% at $76.90 a barrel.

Elsewhere, Japan's Nikkei rose 1%. Shares in Seven &

I Holdings ( SVNDF ) - the owner of 7-Eleven convenience stores -

added 4.7% after a report that Canadian retailer Alimentation

Couche-Tard ( ANCTF ) would raise its buyout offer.

Such a deal would be the largest overseas buyout of a

Japanese firm.

FED MINUTES

Traders have so far regarded China's stocks slide as an

overdue pullback after a hefty 25% surge in the previous six

sessions.

Nearly all sectors fell in China. Property and

tourism were particularly beaten-down - a sign of

doubts that state support would be large and swift enough to

turn around consumers' confidence.

"We think markets can still re-rate up from here, but

policymakers will need to start showing their cards or investors

will lose patience over how the broader domestic economy,

especially consumption, can recover," said Eugene Hsiao, head of

China equity strategy at Macquarie Capital.

The direction of U.S. interest rate cuts was also in focus,

investors said.

Minutes from the U.S. Federal Reserve's September meeting -

where U.S. rates were cut 50 bps - are due later on Wednesday.

Expectations of Fed rate cuts have been pared back following

strong labour market data last week, lifting bond yields and the

dollar.

That backdrop saw a 0.9% slide for the New Zealand dollar in

the Asia session, with the kiwi falling to a seven-week low

after the central bank cut interest rates by 50 basis points and

left the door open to more.

The dollar was last up 0.3% against the Japanese yen at

148.550 yen, and at $1.096 per euro.

($1 = 7.0560 Chinese yuan renminbi)