World stocks pull back from 7week highs
NZ dollar rallies after big rate hike

LONDON, April 5 Reuters World stock markets stumbled on Wednesday as signs that the economic outlook is weakening spurred caution, while a biggerthanexpected interestrate hike from New Zealand lifted the kiwi dollar.

European stocks fell with the broad STOXX 600 index pulling away from Tuesday39;s onemonth highs. U.S. equity futures dipped , and Japan39;s Nikkei fell 1.6 in its biggest oneday percentage fall since midMarch.

MSCI39;s world equity index pulled further away from Tuesday39;s almost sevenweek highs, while Asia trade was thinned by holidays in Hong Kong and China.

Weak U.S. economic data this week has exacerbated recession worries, taking the edge off recent stock market gains.

Data on Tuesday showed U.S. job openings fell in February to the lowest level in almost two years and data on Monday pointed to weakening U.S. manufacturing activity. U.S. March service sector activity data is due out later.

Interest rate futures have rallied strongly in recent weeks as traders bet that turmoil in the banking sector will tighten up on lending anyway and save the need for the Federal Reserve to do the job.

Markets pricing implies a betterthaneven chance that the Fed has finished raising rates and more than 60 bps in cuts this year.

With the banking worries at least in the background for now focus is on the economic data and central bank policy, said Nordea chief analyst Jan von…