* Reports of Saudi Arabia unrest weigh on stocks, oil
* China's unexpected trade deficit fuels growth worries
* Spain's ratings downgrade drives euro down
(Updates with oil closing prices)
By Walter Brandimarte
NEW YORK, March 10 (Reuters) - World stocks and commodities
sank on Thursday after an unexpected trade deficit in China
fueled concerns about the global economy, while the euro fell
after a downgrade of Spain's credit rating by Moody's.
Stocks were pushed even lower after witnesses in Saudi
Arabia said police dispersed protesters and shots were heard,
with some people wounded. For details, see [].
Brent crude futures <LCOJ1> ended lower at $115 a barrel but
were above session lows after the news of the Saudi protest.
Treasuries prices rallied as investors moved into
safe-haven assets.
The prospects of a prolonged period of instability in the
Middle East and North Africa could drive energy costs higher
and choke off the global economic recovery. [].
"Saudi Arabia is the main supplier of oil around the world,
so people are concerned," said Axel Merk, president and chief
investment officer of Merk Investments in Palo Alto,
California.
"People are starting to realize that the turmoil in the
Middle East is going to affect oil supplies for a long, long
time," he added.
Investors also fretted about negative economic data from
China, the world's second-largest consumer of oil.
China posted posted a trade deficit of $7.3 billion for
February, its first since March 2010 and the biggest since
February 2004, as its exports suffered a larger-than-expected
impact from the Lunar New Year holiday. Economists, who had
forecast a small surplus of $4.95 billion, said the sudden drop
was likely to prove temporary.
U.S. crude oil prices <CLc1> fell 1.6 percent to $102.70 a
barrel.
U.S. stocks fell more than 1 percent as an unexpectedly
large increase in claims for unemployment benefits in the
United States and a much wider-than-expected U.S. trade deficit
added to the economic concerns. []
"Overseas issues continue to play a role in U.S. markets.
The situation in Europe isn't complete, the market continues to
have concerns about sovereign credit," said Subodh Kumar, chief
investment strategist at Subodh Kumar & Associates in Toronto.
"Markets have been hoping that China would lead the
recovery, but when you put this (U.S.) data with slower growth
out of China, the idea that everything looks normal is going
away."
The Dow Jones industrial average <> lost 205.70 points,
or 1.68 percent, at 12,007.39, while the Standard & Poor's 500
Index <.SPX> fell 21.98 points, or 1.67 percent, to 1,298.04.
The Nasdaq Composite Index <> was down 45.63 points, or
1.66 percent, at 2,706.09.
Global stocks measured by MSCI's All-Country World Index
<.MIWD00000PUS> slid 1.8 percent.
SPAIN DOWNGRADED
The euro <EUR=> fell 0.91 percent to $1.378 after Moody's
downgraded on Spain to Aa2 from Aa1, warning of further cuts to
the country's credit ratings. []
The move came two days after Moody's downgraded Greece by
three notches, fueling negative sentiment toward struggling
euro zone sovereign borrowers on the eve of a summit of the
currency bloc. []
"This is a reminder they need to come up with a
comprehensive, believable solution by the end of the month,"
said Colin Ellis, chief economist at BVCA.
Demand for safe-haven assets was supported by the euro-zone
debt concerns and the Middle East instability, encouraging
investors to aggressively bid for reopened 30-year bonds during
an auction in the afternoon.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> rose
21/32 in price, with the yield at 3.3897 percent, while 30-year
bonds <US30YT=RR> gained 36/32 in price, with the yield at
4.5368 percent.
(Additional reporting by Herbert Lash, Caroline Valetkevitch,
Chris Reese; Editing by Kenneth Barry)
