NEW YORK (CNNMoney.com) -- Concerns about the global economy roiled world financial markets Tuesday after a report on leading indicators in China was revised lower.
The Conference Board, a New York-based research group, said its Leading Economic Index for China rose 0.3% in April after an increase of 1.2% in May. The group originally reported a 1.7% gain in April, but that was revised lower due to a miscalculation.
Bart Van Ark, chief economist at the Conference Board, said he expects economic growth in China to moderate in the second half of 2010, although he still forecasts a robust 9% growth rate for the full year.
China has recovered strongly from the global slump in 2008 and 2009. The nation's economy expanded at a nearly 12% rate in the first quarter of this year, driven largely by industrial growth and retail sales.
That has many investors looking to China and other emerging economic engines to power the global economy. China has become increasingly important as economic conditions in Europe have deteriorated and the outlook for U.S. growth has come into question.
"If these numbers turn out to be true, that leads to questions about how strong the global recovery will be if Asia is not participating," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management.
But a slight moderation in China's growth rate could be viewed as a positive sign, according to Van Ark.
Policymakers in China have been taking steps to slow domestic lending to keep their economy from overheating. And many economists say the rapid expansion of China's real estate sector in recent months could constitute a price bubble.
"I think the market's reaction is very much related to other pieces of news that came at the same time" as the LEI index, said Van Ark.
Earlier Tuesday, the Conference Board released its June Index of Consumer Confidence, which showed that U.S. consumers are increasingly worried about the job market and are becoming less willing to spend.
Investors are also on edge ahead of the U.S. government's monthly jobs report, which comes out Friday. The report is expected to show the economy lost 100,000 jobs in June, according to economists surveyed by Briefing.com.
Meanwhile, economists point out that while China is an important player on the global state, it is still a so-called emerging economy.
Jay Bryson, global economist at Wells Fargo, said that activity in China accounts for less than 10% of global economic output. By contrast, the United States accounts for about a third of the global economy, he added.
"In and of itself, China is not enough to derail a global economy," he said. "But when you factor in all the other things investors are worried about, you get the kind of reaction we're seeing today."
In China, the Shanghai Composite closed 4.3% lower. The Hang Seng in Hong Kong fell 2.3% and Japan's Nikkei lost 1.3%.
The jitters spread to Europe, where stocks fell over 4% in France and more than 3% in Germany and the United Kingdom.
U.S. stocks followed overseas markets lower and the selling picked up sharply after the consumer confidence report was released. The Dow Jones industrial average was down 2.4% with about one hour left in the session.
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