Global mkts: Stocks slip on slow growth

* Euro may head toward $1.50 this week

* Weak U.S. data stoke worries about growth stalling

* Will central banks come to the rescue of global economy?

The weakest U.S. jobs growth in eight months in May reflected a global business cycle shifting to slower growth and confirmed what many investors had been already anticipating by taking a defensive stance in their portfolios.

The two outstanding questions for them are if the synchronised slowdown reflected in industrial indicators around the globe is a warning of something worse on the horizon and whether monetary policy can again come to the rescue of major economies this time.

For that reason,this week’s meetings of the ECB,embroiled in questions about the need for more Greece aid,the Bank of England,the Reserve Bank of Australia and the Bank of Korea will be focal points for investors.

Japan’s Nikkei share average was down 0.9 percent near the low end of a trading range established since mid April.

Fast Retailing ,operator of the Uniqlo clothing chain,was the biggest drag on the Nikkei,down 2.1 percent,reversing Friday’s gains. But Toyota Motor shares curbed further losses in the Nikkei,rising 0.5 percent on the company’s forecast that production will recover to 90 percent of levels before the massive March earthquake.

For Japan’s stock market,a significant issue is whether valuations can contract any more than they already have in an economy waylaid by natural disasters and political ineffectiveness.

Japanese equities are trading at 0.7 times current book value,the second cheapest market in the G20. Italy is the only cheaper market.

What other major global stock markets are undervalued to this extent? said Kenichi Hirano,a strategist at Tachibana Securities. The U.S. market may have entered a correction phase,but the Tokyo market may not follow suit.

Australian’s benchmark S&P/ASX 200 index fell 0.4 percent after earlier hitting the lowest since March 17.

Markets in China,Hong Kong,Taiwan and South Korea were closed for a long holiday weekend,but traders were on watch for further tightening measures by China’s central bank.

MORE GREEK DRAMA

Despite no long-term solution in sight for the euro zone’s debt crisis,the region’s currency may find some traction this week and provide support to risky assets.

The euro was steady after earlier hitting a one-month high above $1.4650 in the wake of the May U.S. payrolls data on Friday. The euro has bounced nearly 4 percent in the past three weeks,helped by hopes that Greece is close to securing billions of euros in aid.

A new aid package for Greece could cost more than 100 billion euros ($144 billion),German news magazine Der Spiegel said in its latest issue to appear on Monday.

Even with tens of thousands of Greeks taking to the streets to protest austerity measures and European leaders still debating what to do about the country’s mountain of debt,traders have been growingly increasingly numb to the news flow surrounding Greece.

After speculators slashed their net long euro position in the International Monetary Market to a fifth of what it was a month ago,the common currency may have room to rebound further.

The next major obstacle for the euro on charts is $1.4710 — the 76.4 percent retracement of the move down from $1.4940 to $1.3968. Given the negative sentiment building against the dollar though,$1.50 may draw the euro like a magnet.

The ECB may take the opportunity on Thursday after its policy meeting to prepare markets for an interest rate increase in July,an outcome that would widen rate differentials into the euro zone’s favour.

The ECB is likely to send a relatively hawkish message — after all,growth in the euro area has been amongst the most resilient (and data surprises the least negative),Barclays Capital strategists said in a note.

It is therefore quite possible that the euro retests higher levels,especially against the backdrop of an improvement of the picture for peripheral bond markets.

In commodities markets,U.S. crude futures inched higher as the dollar remained soft but gains would be limited by the cloudy economic outlook.

The July contract was up 0.1 percent at $100.31 a barrel.

Gulf Arab OPEC members led by Saudi Arabia look like they will push for an increase in supplies on Wednesday in an effort to support flagging world economic growth by bringing crude prices back below $100 a barrel. These expectations,however,have not had much a downward impact on oil prices yet.