*Global stocks tumble on renewed Europe jitters, Korean row
* Euro nears four-year low versus U.S. dollar on debt woes
* Oil falls toward $67 a barrel on widening risk aversion
* Bond prices gain on European banking, Korean worries
(Adds open of U.S. markets; changes dateline, previous LONDON
and byline)
By Herbert Lash and Carolyn Cohn
NEW YORK/LONDON, May 25 (Reuters) - Commodity prices and
global stocks fell hard on Tuesday on heightened worries that
euro zone banking troubles could hobble the global recovery and
as sabre-rattling on the Korean peninsula unnerved investors.
Oil fell below $68 a barrel and industrial metals tumbled
as investors fled riskier assets to the safety of the U.S. and
Japanese currencies. For details see: []
The euro fell to an 8 1/2-year low against the yen and
neared a 4-year trough versus the dollar after the weekend
takeover of a small Spanish savings bank ignited fears the euro
zone sovereign debt crisis is spreading. []
Asia stocks fell to multi-month lows and European shares
hit their lowest level in 10 months, with banks pressured by
concerns over the health of the euro zone's financial sector.
Banking shares <.SX7P> in Europe fell to a 10-month low.
Geopolitical tensions rose between the two Koreas after
North Korean leader Kim Jong-il ordered his military to go on a
combat footing, exacerbating an already nervous market.
[]
"It's risk aversion, falling stock markets and a stronger
dollar. People are worried the euro zone crisis will spread and
derail the global economic recovery," said Carsten Fritsch,
analyst at Commerzbank.
Global stocks as measured by MSCI's all-country world index
<.MIWD00000PUS> fell 3.1 percent to their lowest since August
2009, while the more volatile emerging stocks index <.MSCIEF>
dropped 4.4 percent to 8-month lows.
Wall Street opened sharply lower, with the benchmark S&P
500 Index <.SPX> falling to a fresh 2010 intraday low, and the
Chicago Board Options Exchange Volatility index <.VIX> climbing
more than 10 percent at the open to 43.15.
Before 10 a.m., the Dow Jones industrial average <> was
down 223.55 points, or 2.22 percent, at 9,843.02. The Standard
& Poor's 500 Index <.SPX> was down 24.60 points, or 2.29
percent, at 1,049.05. The Nasdaq Composite Index <> was
down 58.86 points, or 2.66 percent, at 2,154.69.
U.S. Treasuries climbed on the flight to safety
bid.[]
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
19/32 in price, pushing its yield down to 3.13 percent, the
lowest in over a year.
"We still have all of the euro zone fears, and there are
increased tensions between North and South Korea," said Kim
Rupert, managing director of global fixed income analysis at
Action Economics in San Francisco.
Bank of America Merrill Lynch cut its oil demand growth
forecasts for 2010 to 1.5 million barrels per day from 2 mbpd
due to anticipated slower global economic growth in the second
half of the year.
U.S. light sweet crude oil <CLc1> fell $2.36 to $67.85 per
barrel.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 1.09 percent at 87.142.
The euro <EUR=> was down 1.00 percent at $1.2227, and
against the yen, the dollar <JPY=> was down 0.60 percent at
89.59 yen.
Spot gold prices <XAU=> rose $5.40 to $1,196.90 an ounce.
Asia stocks fell to multi-month lows on fears that Europe's
sovereign debt woes will trigger a renewed crisis among
regional banks.
MSCI's broad measure of Asia-Pacific shares outside of
Japan <.MIAPJ0000PUS> tumbled 4.4 percent to touch its lowest
in 9 months. Japan's Nikkei average <> fell 3.1 percent to
mark a 6-month closing low below a key support level at 9,500.
(Editing by Theodore d'Afflisio)
