Equities, commodities and emerging market currencies suffered hefty losses on Monday as risk averse investors shifted to the perceived safety of the dollar, the yen and government bonds.

“Risk aversion has resurfaced as market participants take profits on riskier exposures amid the World Bank’s downward revision of its global growth forecast for 2009,” said Samarjit Shankar, director of global strategy at Bank of New York Mellon.

“Renewed concerns about the extent of the ongoing global recession and the sustainability of the green shoots of recovery have combined with the instability unfolding in Iran and North Korea to lend an air of pessimism to investor sentiment.”

The World Bank said it expected the global economy to shrink by 2.9 per cent this year, compared with a previous estimate of a 1.7 per cent contraction.

The cautious mood among investors was intensified by uncertainty ahead of this week’s Federal Reserve policy meeting.

Source/Full Story: FT.com

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