* Global shares on track for biggest 1-day fall in 4 weeks
* Oil falls sharply on demand, economic worries
* Yen up as investors unwind carry trades; dollar down
(Updates prices)
By Wanfeng Zhou
NEW YORK, April 12 (Reuters) - Oil prices dropped sharply
for a second day on Tuesday, and helped drag stock prices down
around the world, after Goldman Sachs warned that crude prices
had gotten ahead of fundamentals and were set to fall.
Oil traded in New York is down over 7.0 percent in two days
as Goldman Sachs predicted Brent prices will fall back to $105
in "coming months", down from $120 on Tuesday, and after the
International Energy Agency said high prices could be eroding
demand.
World stocks, as measured by the MSCI's main world equity
index <.MIWD00000PUS> were last down 1.3 percent, the index's
biggest one-day decline in four weeks.
Worries over global growth were heightened after Japan's
economic minister warned damage wrought by last month's
earthquake and tsunami could be worse than initially thought
for the world's third largest economy. []
Japan's move to put the severity of radiation leakage at
its stricken Fukushima nuclear plant on a par with the worst
nuclear disaster at Chernobyl also weighed on sentiment.[]
"The market is increasingly becoming concerned about the
situation in Japan and that high oil prices and high commodity
prices will eventually hurt economic growth," said Mark Bronzo,
money manager at Security Global Investors in Irvington, New
York.
U.S. stocks also fell after disappointing revenues from
aluminum maker Alcoa Inc <AA.N> started the earnings season
late on Monday.
The Dow Jones industrial average <> was last down
121.39 points, or 0.98 percent, at 12,259.79. The Standard &
Poor's 500 Index <.SPX> was down 11.95 points, or 0.90 percent,
at 1,312.51. The Nasdaq Composite Index <> was down 27.58
points, or 0.99 percent, at 2,744.01.
Brent crude oil <LC0c1> dropped $2.84 to $121.14 a barrel,
pulling back from Monday's 2-1/2 year high after a warning
about demand from the International Energy Agency
[] and investment bank Goldman Sachs <GS.N>. U.S.
crude <CLc1> lost $3.37 to 106.54 a barrel.
Societe Generale also said rising gasoline prices in the
U.S. were fueling a debate about "demand destruction" in the
world's top economy. "Geopolitics (are) still critical. But
with prices high, markets may be having doubts on demand,"
SocGen said.
The FTSEurofirst 300 index <> of top European shares
slipped 1.7 percent, with miners and energy firms among the
heaviest losers. Emerging markets <.MSCIEF>, which count
several resource exporters in their ranks, fell 1.9 percent.
Spot gold <XAU=> fell from Monday's record high while
silver <XAG=> sagged from the previous session's 31-year high.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For oil futures positions vs. oil price since 2007:
http://r.reuters.com/duc98r
All Commodities Futures Trading Commission positions:
http://r.reuters.com/buv87r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
SAFE-HAVEN DEMAND
The yen and Swiss franc rose as jittery investors sold
riskier trades funded by borrowing in the two low-yielding
currencies.
"Our positioning data shows some carry trades are pretty
extended," said Chris Walker, currency strategist at UBS.
The yen firmed to a 1-1/2 week high versus the U.S. dollar
<JPY=> though gains are likely to be curbed by the Bank of
Japan's perceived determination to keep monetary policy loose
to aid economic recovery. The dollar fell 0.9 percent against
the Swiss franc <CHF=EBS> to 0.89479. It earlier dropped to
0.89421, its lowest in more than three weeks.
The euro rose to a fresh 15-month high against the dollar
above $1.45, boosted by reported buying from China and news the
world's second largest economy was willing to purchase more
Spanish debt.
Dovish comments from key U.S. Federal Reserve officials
weighed on dollar sentiment. Two of the Fed's most powerful
officials, Janet Yellen and William Dudley, said the U.S.
central bank should stick to its super-easy monetary policy as
inflation was not a threat and unemployment remains too high.
[]
The U.S. dollar index <.DXY>, which tracks the greenback
against a basket of major currencies, was down 0.5 percent at
74.754, after hitting 74.704, its lowest since December 2009.
(Additional reporting by Angela Moon and Gertrude
Chavez-Dreyfuss in New York and Sebastian Tong in London;
Editing by Chris Sanders)
