* U.S. stocks slide as weak economic data sparks retreat
* Bonds gain on record drop in October U.S. retail sales
* Oil falls 2 percent as euro zone enters recession
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Nov 14 (Reuters) - U.S. stocks and crude oil fell
on Friday as data showing much of Europe in recession, along
with a record drop in U.S. retail sales in October, prompted
risk aversion amid a deteriorating global economic outlook.
Gold futures surged more than 5 percent in heavy buying
ahead of a Group of 20 summit meeting in Washington starting on
Saturday, but breakthroughs are not expected in efforts to
subdue a credit crisis that has rocked the world's markets.
The price of U.S. and euro zone government debt rose, as
did the U.S. dollar and the yen against the euro, as investors
took cover in less-risky assets.
"People are going to wait on the sidelines and see what
comes out of (the G20 meeting) before they start to take a view
with respect to what's going on next week," said Robert Blake,
senior currency strategist at State Street Global Markets in
Boston.
"Generally speaking, we would be hesitant to say this is
the bottom for sentiment," he said.
Data on Friday showed the 15-nation euro zone has fallen
into its first recession since the currency bloc was created in
1999.
A late-day rally fizzled on Wall Street, sending stocks
down for the fourth time this week and stripping away more than
half of the gains from Thursday's big rally.
The Dow Jones industrial average <> slid 337.15 points,
or 3.82 percent, at 8,498.10, the Standard & Poor's 500 Index
<.SPX> fell 37.98 points, or 4.17 percent, at 873.31. The
Nasdaq Composite Index <> lost 79.85 points, or 5.00
percent, at 1,516.85.
For the week, the Dow fell 5 percent, the S&P 500 shed 6.2
percent and the Nasdaq lost 7.9 percent.
European shares managed to close higher, but pared gains as
the report of a whopping 2.8 percent drop in U.S. retail sales
in October spooked investors, who also were unnerved by more
signs of bleak holiday sales.
Two key U.S. retailers, department store operator J.C.
Penney <JCP.N> and teen apparel seller Abercrombie & Fitch Co
<ANF.N>, warned of worsening results ahead as shoppers rein in
spending. They both reported lower quarterly profits and said
soft conditions would extend into next year.
"We started the day in an equity rally but the driving
force remains risk-aversion and deleveraging," said Cyril
Beuzit, head of interest rate strategy at BNP Paribas in
London. Bonds will perform well through year-end, he said.
The pan-European FTSEurofirst 300 index <> ended 0.8
percent higher at 859.58 points, off a day's high of 879.19.
Oil shares led the advance, with BP <BP.L>, Royal Dutch
Shell <RDSa.L> and Total <TOTF.PA> up between 3.2 percent and
3.6 percent.
Economic worries were compounded by renewed concerns about
the credit market, two days after U.S. Treasury Secretary Henry
Paulson proposed changes to the government's $700 billion bank
bailout. The interbank lending rates for dollars rose for a
second day, raising doubts about the Treasury's effectiveness
to ease credit conditions and the overall economy.
Oil prices fell as the news on the euro zone recession and
U.S. retail sales stirred concerns of a further drop in fuel
demand.
U.S. crude <CLc1> settled down $1.20 at $57.04. London
Brent crude for January <LCOc1> dropped $2.00 at $54.24.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
38/32 in price to yield 3.71 percent. The 2-year U.S. Treasury
note <US2YT=RR> gained 2/32 in price to yield 1.20 percent.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.67 percent at 87.028. Against
the yen, the dollar <JPY=> fell 0.76 percent at 96.84.
The December gold contract <GCZ8> settled up $37.50 to
$742.50 an ounce in New York.
Stock markets rose overnight in Asia, although they pared
sharp gains by half. Japan's Nikkei <> was among the
region's leaders, with a 2.7 percent advance, after earlier
rising as much as 5.5 percent.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> was up 1.6 percent, after earlier rising as
much as 3.2 percent.
(Reporting by Ellis Mnyandu, Richard Leong, Wanfeng Zhou in
New York and Christopher Johnson, Nicholas Vinocur and Rebekah
Curtis in London; writing by Herbert Lash; Editing by Leslie
Adler)
