* MSCI world equity index down 0.4 pct at 335.42
* Japan earthquake, Saudi unrest spur safe-haven buying
* Yen briefly falls after quake; Bunds rise
By Natsuko Waki and Caroline Copley
LONDON, March 11 (Reuters) - Global stocks fell to their
lowest level in nearly 6 weeks on Friday and government bonds
rose after an 8.9 magnitude earthquake hit Japan and concerns
about unrest in Saudi Arabia prompted investors to sell risky
assets.
Japanese stock futures fell nearly 5 percent and the yen
briefly dipped after the quake, the biggest to hit Japan in 140
years, struck the northeast coast on Friday.
The quake triggered a 10-metre tsunami that swept away
everything in its path, including houses, cars and farm
buildings on fire. []
Financial markets were also nervous about a planned day of
demonstrations in Saudi Arabia after police dispersed Shi'ite
protests in the town of Qatif in the oil-producing Eastern
province on Thursday. Shots were heard from the area where some
200 people were demonstrating.
Investor morale has been souring in the past few weeks as
concerns rose that unrest in Libya and the wider Arab world may
further boost oil prices, and resulting inflationary pressures
could slow the global economic recovery.
"Markets are in a correction mode. If you get natural
disasters at a time when the markets are worried about something
else, they can compound the worries," said Bernard McAlinden,
investment strategist at NCB Stockbrokers, in Dublin.
"But there is no reason to suggest that the stock market is
going to collapse. The underlying tendency of the market is
still to have net buyers as money rotates at the margin out of
safe-haven bonds."
World stocks as measured by MSCI <.MIWDOOOOOPUS> were down
0.4 percent to 335.19, falling to their lowest level since the
end of January. The MSCIindex had hit 30-month highs in
mid-February.
The FTSEEurofirst 300 <> index of top European shares
fell 0.6 percent to a three-month low. MSCI emerging stocks
<.MSCIEF> were down 0.1 percent.
U.S. crude oil <CLc1> fell 0.8 percent to $101.86 a barrel
while Brent crude <LCOc1> lost 1.5 percent to $113.66.
The yen fell as low as 83.29 per dollar <JPY=> before
erasing losses to stand up 0.1 percent at 82.83. The euro was up
0.1 percent at $1.3816 <EUR=> ahead of a summit to discuss the
region's debt crisis.
Bund futures <FGBLc1> were up 30 ticks.
The yield spread between Portuguese 10-year government bond
yields and benchmark German Bunds widened on Friday as investors
grew increasingly worried about Lisbon's ability to finance
itself without foreign aid.
The Portuguese/German 10-year government bond yield spread
<PT10YT=TWEB> <DE10YT=TWEB> was last 6 basis points wider on the
day at 452 bps.
Euro zone leaders are set to agree a "competitiveness pact"
at a summit on Friday and will push Portugal to announce new
reforms to increase market confidence as they seek to draw a
line under the debt crisis. []
(Additional reporting by Atul Prakash and Marius Zaharia;
Editing by John Stonestreet)
