* Stocks fall worldwide on Obama plan to curb risk-taking
* Dollar falls vs yen, euro as Obama hurts risk appetite
* Oil slips below $75 a barrel as commodities hit
* U.S. bonds fall on supply concerns, profit-taking
(Updates with U.S. markets, changes byline; dateline
previously LONDON)
By Herbert Lash
NEW YORK, Jan 22 (Reuters) - Commodity prices tumbled and
global stocks posted their worst week in months on Friday as
investors turned to safer assets after U.S. President Barack
Obama's move to curb risk-taking by banks sparked widespread
unease.
Oil slid under $75 a barrel as nearly all commodity prices
were pressured by Obama's proposals on Thursday to limit banks'
trading activities, which have boosted their presence heavily
in commodities. For details see: []
U.S. stocks fell more than 2 percent in the worst week
since March for the Dow, and since October for the Nasdaq and
S&P 500. The slide erased all gains for stocks in 2010.
The CBOE Market Volatility Index <.VIX>, known as Wall
Street's fear gauge, rose 55.6 percent since Wednesday in its
biggest three-day jump in almost three years.
The sour mood intensified on Friday with uncertainty over
the pending confirmation vote for Federal Reserve Chairman Ben
Bernanke to a second term as two Senate Democrats said they
would vote against Bernanke.
The stunning election victory earlier this week of
Republican Scott Brown in Massachusetts for the U.S. Senate
seat of the late Edward Kennedy, costing Democrats their
sure-fire majority, also added to the sense of uncertainty.
"Between uncertainty over Bernanke, Obama's bank regulation
proposal and the election in Massachusetts, the market is like
a cork in the water and the Democrats just hit the flush," said
Jack Ablin, chief investment officer at Harris Private Bank in
Chicago.
The Dow Jones industrial average <> closed down 216.90
points, or 2.09 percent, to 10,172.98. The Standard & Poor's
500 Index <.SPX> slid 24.72 points, or 2.21 percent, to
1,091.76. The Nasdaq Composite Index <> fell 60.41 points,
or 2.67 percent, to 2,205.29.
The slide in equity markets helped crude oil to extend
losses, while gold hit a one-month low and silver also fell.
Other metal prices remained depressed, with both zinc and
nickel falling about 5 percent. []
The exit from risky trades pulled the U.S. dollar lower
against the euro and yen, but the euro rebounded from
Thursday's near six-month low against the greenback.
[]
The yen, which often benefits when investors grow nervous,
touched a five-week high against the dollar and hit a
nine-month peak against the euro.
An aversion to risk drove markets after Obama's dramatic
proposals on banks, which potentially could rewrite the world
financial order. The lack of details only heightened the sense
of uncertainty, investors said.
"The bottom line here is we have no idea how the banking
plan is about to unfold, if indeed it does," said Peter Dixon,
an economist at Commerzbank in London.
"The markets are always going to sell off when there is
uncertainty. I think this is the story for today and will be
for the next week," Dixon said.
Oil fell to four-week lows as equity markets slumped.
U.S. crude <CLc1> fell $1.54 to settle at $74.54 a barrel,
the lowest settle since Dec. 22 and breaking below the 100-day
moving average of $75.20.
ICE Brent crude <LCOc1> fell $1.75 to settle at $72.83.
U.S. gold futures ended down, off a one-month low hit
earlier in the session. []
Gold for February delivery <GCG0> settled down $13.50 at
$1,089.7 an ounce in New York.
Oil, gold and base metals initially got some support from
dollar weakness, but later resumed losses on the proposals to
restrict banks or financial institutions from investing in,
owning, or sponsoring a hedge fund or a private equity fund.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.04 percent at 78.292.
The euro <EUR=> was up 0.28 percent at $1.413. Against the
yen, the dollar <JPY=> was down 0.54 percent at 89.93.
With no U.S. data being reported on Friday, investors and
traders had only the proposed banking legislation to focus on,
said Kathy Lien, director of currency research at GFT in New
York.
"Whenever there is political uncertainty, traders always
sell first and ask questions later," Lien said.
U.S. government debt prices slipped as investors cashed in
on the previous day's rally and prepared for a series of
auctions next week. []
Prices in the long end of the yield curve fell most
significantly, with the 30-year U.S. Treasury bond <US30YT=RR>
down 15/32 in price to yield 4.53 percent.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 3/32 in price to yield 3.61 percent.
Earlier in Asia, Japanese stocks <> fell 2.56 percent
to a three-week closing low, while the MSCI Asia-Pacific index
excluding Japan <.MIAPJ0000PUS> was down 1.75 percent and
looked set for a loss of 4.8 percent this week.
(Reporting by Rodrigo Campos, Michael O'Boyle and Emily
Flitter in New York; Emma Farge and Joanne Frearson; writing by
Herbert Lash; Editing by Leslie Adler)
