* Global shares on track for biggest 1-day fall in 4 weeks
* Oil falls sharply on demand fears, Goldman warning
* Yen up as investors unwind carry trades; dollar down
(Updates to market close, updates prices)
By Wanfeng Zhou
NEW YORK, April 12 (Reuters) - Oil prices suffered their
biggest two-day loss in 11 months and stocks dropped on Tuesday
on concerns about the strength of global growth and as Goldman
Sachs warned crude was set for a pullback.
The price of crude traded in New York slid more than 3
percent, bringing losses since Friday to 5.8 percent. Goldman
Sachs predicted Brent prices would fall back to $105 in "coming
months," down from $120 on Tuesday, and 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 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 that damage caused by last month's
earthquake and tsunami could be worse than initially thought
for the world's third-largest economy. []
Japan's decision 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 ended lower after disappointing revenue figures
from aluminum maker Alcoa Inc <AA.N>, the Dow component that
marked the start of the quarterly earnings season with its
release after the market close on Monday. Energy stocks led
losses on the benchmark S&P 500.
The S&P energy index <.GSPE> , the market's top performer
in the first quarter, shed 3 percent.
"The leadership has been for the longest time in those
sectors that are highly related to global growth and commodity
prices. So once the commodity space starts rolling over, then
equities are poised to follow," said Robert Van Batenburg, head
of equity research at Louis Capital in New York.
The Dow Jones industrial average <> dropped 117.53
points, or 0.95 percent, to end at 12,263.58. The Standard &
Poor's 500 Index <.SPX> dropped 10.30 points, or 0.78 percent,
to 1,314.16. The Nasdaq Composite Index <> dropped 26.72
points, or 0.96 percent, to 2,744.79.
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.
Brent crude oil <LC0c1> fell $3.06 to settle at $120.92 a
barrel. The May Brent contract expires on Thursday. U.S. May
crude <CLc1> fell $3.67 to settle at $106.25.
"Fear of demand destruction is killing this market. There
is a feeling that the recent rally lifted oil prices to
unsustainable levels," said Phil Flynn, analyst at PFGBest
Research in Chicago.
Spot gold <XAU=> fell from Monday's record high while
silver <XAG=> sagged a day after hitting a 31-year high.
The Reuters-Jefferies CRB index <.CRB>, a global
commodities benchmark, fell about 2 percent in its sharpest
one-day decline in a month as raw materials markets came under
pressure from the sell-off in oil.
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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
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SAFE-HAVEN DEMAND
Safe-haven demand boosted Treasury prices. The benchmark
10-year U.S. Treasury note <US10YT=RR> was up 23/32, with the
yield at 3.498 percent. Thirty-year bonds <US30YT=RR> rose more
than a point in price, last yielding 4.579 percent.
The yen and Swiss franc rose sharply as jittery investors
sold riskier trades funded by borrowing in the two low-yielding
currencies.
"Carry trades are owned heavily and looked overextended,
especially the yen crosses. These are the ones looking shaky,"
said Tom Fitzpatrick, chief technical strategist at CitiFX in
New York.
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 1.2 percent against the Swiss franc
<CHF=EBS> to 0.8957 francs. It earlier dropped to 0.89421, its
lowest in more than three weeks.
The euro rose to a 15-month high against the dollar above
$1.45, boosted by reported buying from China and news that
China, 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 is 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 0.3 percent at
74.835 after hitting 74.704, its lowest since December 2009.
(Additional reporting by Robert Gibbons, Angela Moon and
Gertrude Chavez-Dreyfuss in New York; Editing by Leslie Adler)
