* Global stocks fall; Chevron warning fuels profit jitters
* Bonds rally on economic recovery doubts, bargain hunting
* Oil below $60, set for biggest weekly fall since January
* Yen, dollar gain as U.S. consumer sentiment sours
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, July 10 (Reuters) - Flagging U.S. consumer
sentiment and a dreary earnings outlook from Chevron fed
jitters about an economic recovery on Friday, dragging global
stocks and oil down while boosting the dollar and government
debt on a safe-haven bid.
U.S. crude prices slid below $59 a barrel and were poised
for their biggest weekly decline since January, while European
shares notched a fourth straight week of losses.
Crude's slide has underscored worries that recovery will be
weaker than originally hoped and that the second-quarter
corporate results just starting to be released are unlikely to
shine.
"Expectations for the earnings season are quite dim,
particularly taking into account the falls we have seen in the
S&P and the Dow," said Kornelius Purps, fixed-income strategist
at UniCredit in Munich.
U.S. consumers' moods soured in early July on persistent
worries about jobs, the Reuters/University of Michigan Surveys
of Consumers showed, offering little hope that consumer
spending will help a sputtering economy.
Growing anxiety about a protracted economic downturn, job
security and loss of wealth were key factors depressing
sentiment. Economists monitor the survey as a proxy of future
consumer spending, a linchpin of the U.S. economy.
Few companies will raise their outlooks during this
reporting season, said David Katz, chief investment officer at
Matrix Asset Advisors in New York.
"There's no incentive to step up and talk up the future,
especially because there's low visibility," he said. "Our
expectation is that companies are going to do what they've been
doing: beating expectations but setting a low bar and being
cautious."
At 1 p.m., the Dow Jones industrial average <> was down
51.84 points, or 0.63 percent, at 8,131.33. The Standard &
Poor's 500 Index <.SPX> was down 4.90 points, or 0.56 percent,
at 877.78. The Nasdaq Composite Index <> was down 1.45
points, or 0.08 percent, at 1,751.10.
The FTSEurofirst 300 <> index of top European shares
fell 1.1 percent to close at 814.29 points, its lowest close in
more than 10 weeks.
Drugmakers were among the biggest losers, including
Novartis <NOVN.VX>, which will be the first of the sector's
major players to report earnings next week.
Copper fell as the dollar rose, while gold steadied after
reversing earlier losses.
Spot gold prices <XAU=> rose 40 cents to $911.85 an ounce.
U.S. light sweet crude oil <CLc1> fell 80 cents to $59.61
barrel.
"The mood has changed and people are losing confidence
about the economic recovery," said Simon Wardell at IHS Global
Insight. "We are in one of those phases where no matter what
happens in other markets oil will go down."
U.S. Treasuries rallied on a safety bid and as investors
jumped back into debt on relief the market digested this week's
sale of $73 billion in long-dated supply without much of a
hitch. []
"The recession hasn't really bottomed out," said Anne Ruff,
a portfolio manager with Rydex Investments in Rockville,
Maryland. "The bond market should continue to rally."
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
31/32 in price to yield 3.3 percent. The 2-year U.S. Treasury
note <US2YT=RR> was up 2/32 in price to yield 0.89 percent.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.43 percent at 80.211. Against
the yen, the dollar <JPY=> was down 0.63 percent at 92.34.
The euro <EUR=> was down 0.49 percent at $1.3955.
Amid the gloomy outlook, rates on dollar, euro and sterling
funds that banks lend among themselves eased again, with
benchmark three-month rates hitting record lows as money
markets remained flush with central bank liquidity.
"They're going to keep an ultra accommodative policy in
place ... and supply whatever liquidity that is necessary,"
said Sean Maloney, rate strategist at Nomura in London.
Uncertainty over earnings and the prospect for economic
recovery led Asian shares lower, with Japanese shares sliding
to near seven-week lows.
Japan's Nikkei average <> shed just 0.04 percent,
falling for an eighth straight session, while MSCI's measure of
stocks elsewhere in the Asia-Pacific region <.MIAPJ0000PUS>
edged up during the Asia session, but later fell.
(Reporting by Leah Schnurr, Nick Olivari, Richard Leong and
Ellen Freilich in New York; Emma Farge, Brian Gorman, Emelia
Sithole-Matarise and Jan Hardy in London; writing by Herbert
Lash; Editing by Leslie Adler)
