(Recasts with U.S. markets, changes byline; dateline previous
LONDON)
* Global stocks slide; Dow poised to enter bear territory
* Oil prices surge to new record high above $142 a barrel
* Risk aversion prevails, lifting bond, oil, gold prices
* Dollar falls vs yen, Swiss franc as risk appetite wanes
By Herbert Lash
NEW YORK, June 27 (Reuters) - Wall Street's miserable month
of June continued on Friday as global stocks fell further and
oil climbed to another record as investors fled risk to the
safety of government bonds, gold and the Swiss franc.
Crude surged to a new record high of more than $142 a
barrel, before paring some of its gains. Tumbling equity
markets helped trigger a wider rally in commodities as
investors took cash out of stocks and shifted to other assets
to take advantage of inflation.
Gold rose to a one-month high, lifted by the new spike in
oil prices and a drop in the dollar against the euro. The
safe-haven Swiss franc rose to a three-week peak against the
dollar. Spot gold prices <XAU=> rose $11.55 to $927.80 an
ounce.
U.S. Treasury debt rose after a rather benign reading of
inflation gave investors confidence the Federal Reserve may not
have to raise interest rates soon to combat price pressure.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
10/32 to yield 3.99 percent. The 30-year U.S. Treasury bond
<US30YT=RR> added 23/32 to yield 4.55 percent.
"There is a bout of risk reduction across assets ... Oil
prices headed up and that's putting more pressure on equities,"
said Martin McMahon, FX strategist at Credit Suisse in Zurich.
A new round of gloomy predictions about the outlook for
banks renewed pressure on the battered U.S. and European
financial sectors. Lehman Brothers predicted rival Merrill
Lynch <MER.N> would write down another $5.4 billion in the
second quarter and slashed its price target for the stock.
Merrill shares initially fell, but rebounded to rise
slightly in early afternoon trade.
U.S. stocks were poised to record their largest monthly
losses in nearly five years as June ends on Monday.
The Dow and the Nasdaq fell on concerns about the banking
sector and the impact of record oil prices on the U.S. economy.
The broad Standard & Poor's 500 Index rose slightly, led by
energy-related shares.
"Higher oil prices are continuing to be a drag on the
market. The question is how much are they weighing on
discretionary spending," said Edward Bretschger, director,
equity sales and trading at Calyon Securities in New York.
The Dow Jones industrial average <> was down 78.65
points, or 0.69 percent, at 11,374.77. The Standard & Poor's
500 Index <.SPX> was down 3.42 points, or 0.27 percent, at
1,279.73. The Nasdaq Composite Index <> was down 14.43
points, or 0.62 percent, at 2,306.94.
European stocks fell as profit warnings by retail
bellwether Carrefour <CARR.PA> and mobile phone maker Sony
Ericsson rattled investors.
The FTSEurofirst 300 <> index of top European shares
closed a roller-coaster session 0.4 percent lower at 1,192.24
points. On the week, the index has lost 2.5 percent; the index
has shed 27 percent since it peaked last July.
"I remain very bearish on stocks, even at current prices,"
said Christian Jimenez, president of IMENE Investment Partners
in Paris. "We're seeing retailers getting punished as
consumers' wallets are getting hit by high oil prices. They pay
more at the pump and they have less money to spend."
Carrefour shares sank 7.8 percent, hitting their lowest
level in more than three years after the world's second-biggest
retailer issued a profit warning.
Sony Ericsson warned it would make no profit in the second
quarter due to weaker demand for its more expensive phones,
sending shares in co-owner Ericsson <ERICb.ST> down 7.6
percent, while rival Nokia <NOK1V.HE> dropped 4.5 percent.
Investors piled into energy, metals and grains markets for
a second straight day, fleeing battered stock markets and the
plunging U.S. dollar.
U.S. light sweet crude oil <CLc1> rose $1.39 to $141.03.
The Reuters-Jefferies CRB Index <.CRB>, which tracks 19
commodity futures, was up 30 percent year-to-date after hitting
a new record high of 465.19 points.
"Fund money seems again to be leaving the imploding equity
markets and heading into commodities," said Edward Meir, an
energy and metals commentator at MF Global in New York.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.11 percent at 72.417. Against the
yen, the dollar <JPY=> fell 0.45 percent at 106.29.
The euro <EUR=> fell 0.01 percent at $1.5752.
The yen hit a three-week high against the dollar and
rebounded from a record low against the euro as investors
reduced their risk exposure.
The Swiss franc rose after Russia's central bank said it
plans to increase the currency's share in its $558.7 billion
gold and foreign exchange reserves.
Earlier in Asia, Japanese stocks <> shed 2 percent to
a two-month closing low while speculation of an imminent
interest rate hike in China pushed local shares to a 16-month
trough.
The MSCI index of stocks in the Asia-Pacific region
<.MIAPJ0000PUS> outside of Japan fell 2.1 percent to a
three-month low.
Copper hit its highest level in nearly two months on
Friday, boosted by strong fundamentals and falling stocks.
(Reporting by Ellis Mnyandu, Steven C. Johnson and Chris
Reese in New York; Jane Merriman, Santosh Menon, George Matlock
and Raissa Kasolowsky in London and Blaise Robinson in Paris)
(Reporting by Herbert Lash. Editing by Richard Satran)
