GLOBAL MARKETS-Stocks, euro fall as growth worries hit risk

                                
* MSCI world equity index down 0.9 pct
                                
 * Euro falls 1 pct, within half a U.S. cent of 4-yr low
                                
 * Oil dips, government bonds, dollar rise
                                
 
                                
 By Natsuko Waki
                                
 LONDON, June 1 (Reuters) - World stocks fell on Tuesday and
the euro slipped closer to a four-year low against the dollar as
expectations that slowing growth in China and the euro zone
would hamper the global economic recovery hit risky assets.
                                
 European stocks fell more than 1 percent in the first hour
of trading, with BP <BP.L> losing as much as 15 percent after
its attempt to plug a disastrous oil leak in the Gulf of Mexico
failed.
                                
 After May ended as the most volatile month of trading since
the aftermath of Lehman Brothers' collapse in late 2008,
investors focused on concerns that growth would slow in a euro
zone struggling to rein in debt, in turn reducing demand for
exports from economies like China, reducing production there.
                                
 A survey showed manufacturing activity in the euro zone
expanded in May at a considerably more sluggish pace than in
April [nSLAVGE65K], while separate data showed the pace of
China's factory output eased last month [nTOE65001Z].
                                
 "There is very little reason at the moment for people to be
adding more risk," said Justin Urquhart Stewart, director at
Seven Investment Management.
MSCI world equity index <.MIWD00000PUS> fell 0.9 percent on
the day. The index lost nearly 10 percent since April, putting
it on track for its biggest quarterly loss since March 2009.
                                
 The FTSEurofirst 300 index <.FTEU3> fell 1.7 percent while
emerging stocks <.MSCIEF> lost 1.9 percent.
                                
 Bund futures <FGBLc1> rose 50 ticks while the spreads
between Italian and German 10-year government bonds yields rose
as German unemployment fell faster than expected in May.
                                
 The dollar <.DXY> rose 0.6 percent against a basket of major
currencies while the euro fell 1 percent to $1.2175 <EUR=>,
around half a cent above the four-year low it hit last month.
                                
 The single currency has been under pressure as concerns grew
that the region's sovereign debt problems and slowing growth
will usher in a new round of writedowns for the banking sector.
                                
 The European Central Bank warned on Monday that euro zone
banks faced up to 195 billion euros ($239 billion) in a "second
wave" of potential loan losses over the next 18 months due to
the financial crisis, and said it had increased purchases of
euro zone government bonds. [ID:nLDE64U0OS]
                                
 "The situation remains difficult for the euro," Commerzbank
said in a note to clients.
                                
 "Concerns about the consequences of the savings measures
that have been initiated in many countries demonstrate how bad
sentiment for the joint currency currently is."
                                
 Underlining contagion risks from the euro zone crisis, China
warned on Monday that global growth remained vulnerable to
sovereign debt risks and the possibility of a second downturn.
[ID:nTOE64U03S]
                                
 Such global growth concerns weighed on oil, with U.S. crude
oil <CLc1> losing 1.9 percent to $72.58 a barrel.
                                
 (editing by John Stonestreet)