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China economy fears continue to drive markets

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An elderly Chinese man walks past the headquarters of the People's Bank of China (PBOC) in Beijing, China, Tuesday, March 11, 2014.

An elderly Chinese man walks past the headquarters of the People’s Bank of China (PBOC) in Beijing, China, Tuesday, March 11, 2014.

Vincent Thian, Associated Press

LONDON — Concerns over the Chinese economy and the ongoing tensions in Ukraine continued to drive stock markets around the world lower Friday.

The twin worries have had a firm grip over financial markets all week, especially as there's been a relative dearth of market-moving economic news in the U.S. and Europe.

With traders monitoring discussions Friday between U.S. Secretary of State John Kerry and Russia Foreign Minister Sergei Lavrov in the run-up to Sunday's referendum in the Ukraine region of Crimea over joining Russia, analysts said there's unlikely to be a turnaround in sentiment.

"At the end of the week, investors will likely want to sit on their hands and monitor the outcome of U.S.-Russian talks on the Ukraine today and the outcome and aftermath of the Crimean referendum," said Neil MacKinnon, global macro strategist at VTB Capital.

In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 6,659 while Germany's DAX fell 0.3 percent to 8,892. The CAC-40 in France was 0.6 percent lower at 4,224. The biggest casualty was Russia's main RTS index, which was trading around 3 percent lower.

Wall Street was poised to recover some of Thursday's losses. Dow futures and the broader S&P 500 futures were both 0.2 percent lower.

"With a host of geopolitical considerations to be made, there's still scope for more selling into the weekend break," said Patrick Latchford at Valutrades.

Earlier, Asian stocks had a torrid session. China has been the main driver in markets there this week as investors have grown increasingly cautious about the outlook for the world's No. 2 economy following a raft of disappointing economic news.

Japan's Nikkei 225 stock had a particularly bad session, falling 3.3 percent to 14,327.66. As a result, the index ended the week 6.2 percent lower.

As well as fretting over the fallout from China, Japanese investors have been responding to the recent rise in the value of the yen in light of its status as a safe haven asset in times of market stress. The appreciating yen can make the country's exports less competitive in export markets.

The dollar was down a further 0.2 percent at 101.53 yen. At the start of the week, the dollar was trading above the 103 yen mark.

Elsewhere in Asia, Hong Kong's Hang Seng dropped 1 percent to end at 21,539.49 and China's Shanghai Composite fell 0.5 percent to 2,004.34.

In other financial markets, the mood was similarly subdued. The euro was up 0.2 percent at $1.3892 while a barrel of benchmark New York crude rose 0.1 percent to $98.31.