Shares fall on G20 disappointment, Fed hike worries

Shares retreated in Europe and Asia on Monday after a weekend meeting of G20 finance chiefs ended with no new plan to spur global growth and as investors fretted the US Federal Reserve could raise interest rates before year-end.

The dollar, however, tumbled against the Japanese yen as investors sought shelter from the fall in equities, which saw Chinese stocks lose nearly 3 percent. Gold, another "safe haven", rose and was on track for its best month in four years.

G20 finance ministers and central bankers, meeting in Shanghai on Friday and Saturday, agreed to use "all policy tools - monetary, fiscal and structural - individually and collectively" to reach the group's eco- nomic goals. But there was no plan for coordinated stimulus, which some investors had been seeking after concerns about a slowdown in China depressed markets at the beginning of 2016. The pan-European FTSEurofirst 300 index .FTEU3 fell 1 percent and Germany's DAX .GDAXI was down 1.5 percent. Britain's FTSE 100 index .FTSE lost 0.8 percent. "Markets looked at the G20 meeting and found it a tad disappointing, what they had been looking for was a unification of the G20 to do something as a force," said Peter Lowman, CIO of Investment Quorum, a London-based wealth management firm.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.6 percent and appeared likely to post its second consecutive month of losses, with a 1.2 percent drop so far this month.

Chinese shares closed at one-month lows. The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen, closed down 2.5 percent while the Shanghai Composite index .SSEC fell 2.9 percent on concern rising real estate prices would see funds withdrawn from shares. Tokyo's Nikkei .N225 lost 1 percent as the yen gained, making life more difficult for Japanese exporters, and on China worries. The yen JPY= gained 1 percent to 112.90 per dollar. The euro dipped 0.1 percent to $1.0922. The dollar fell 0.1 percent against a basket of its peers .DXY, having gained on Friday after upbeat U.S. data showing the U.S. economy grew faster than previously thought in the last quarter of 2015. That revived expectations U.S. inter- est rates could rise again this year. Any 2016 hike had been priced out of markets but federal funds futures implied an around 50 percent chance of a rise in December.

Sterling GBP=, which took a hit last week on worries Britons could vote to leave the European Union in a June referendum, was steady at $1.3876.

Weaker stocks helped raised investor appetite for low-risk government debt. U.S. 10-year Treasuries US10YT=RR yielded 1.75 percent, compared with 1.77 percent in New York on Friday.

German 10-year Bund DE10YT=TWEB yields fell nearly 3 basis points to 0.12 percent and British gilt GB10YT=RR yields fell 5 bps to 1.36 percent. Bund traders were looking to preliminary euro zone inflation data for clues to possible further stimulus from the European Central Bank. "Today's prospective decline in the HICP flash estimate comes with downside risks given Friday's country releases," Commerzbank analysts Rainer Guntermann said. "Speculation about bolder ECB measures... could unfold." Oil prices edged up as some in markets said a fall, which has seen crude lose some 70 percent since mid-2014, may have reached a bottom. Data on Friday showed a fall in the number of U.S. shale oil rigs in production.

Brent crude LCOc1 rose 17 cents a barrel to $35.27. It is up 18 percent since Feb. 11, the last day on which it dipped below $30. Gold XAU= gained 0.7 percent to $1,230 per ounce and has risen 10 percent so far this month, its best performance in four years.