* Wall Street eases on worries over economic recovery
* Dollar falls to 4-month low as risk appetite rises
* Oil slips after hitting $60 for first time in 6 months
* U.S. bonds flat to up as weak stocks revive safety bid
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, May 12 (Reuters) - Global stocks slipped and oil
prices retreated after hitting $60 a barrel on Tuesday as a
rally in riskier assets lost steam on worries that expectations
of a recovering economy might have been overdone.
Optimism was at cross currents among investors. The U.S.
dollar fell to a four-month low, as currency markets focused on
positive news out of Europe, revising some appetite for risk,
while gold was firmer, reflecting some discomfort with recent
rallies in stocks and crude oil.
Oil prices hit $60 for the first time in six months,
boosted in part by the weaker dollar and stock market gains.
U.S. Treasury debt prices erased losses and were flat to
higher as a drop in stocks revived a bid for safe-haven U.S.
government debt.
The euro extended gains against the dollar after a member
of the European Central Bank Governing Council said there is no
need for the ECB to expand its asset purchase program to other
sorts of private debt. For more, see [].
Longer-dated euro zone government bonds came under selling
pressure as gains by the euro, which broke through a seven-week
high of $1.37, ebbed <EUR=>.
The euro <EUR=> was up 0.24 percent at $1.3606 at 1 p.m.
But a pullback in stocks dragged the benchmark S&P 500
below the psychologically important support level of 900 for
the first time in a week.
Weaker financial, mining and materials stocks outweighed
positive drugmakers and energy shares in the United States and
Europe, with banking shares among the biggest decliners.
Analysts said some investors, worried that there were
unlikely to be any catalysts to sustain the recent hefty gains
in the near-term, were taking profits.
"At this point there are not a lot of new reasons to buy
stocks, earnings seasons is over and we've got through the
stress tests," said Bruce Zaro, chief technical strategist at
Delta Global Advisors in Boston.
At 1 p.m., the Dow Jones industrial average <> fell
51.69 points, or 0.61 percent, at 8,367.08. The Standard &
Poor's 500 Index <.SPX> fell 12.60 points, or 1.39 percent, at
896.64. The Nasdaq Composite Index <> slipped 34.95
points, or 2.02 percent, at 1,696.29.
The FTSEurofirst 300 <> index of top European shares
closed 0.2 percent lower at 852.62 points.
"The markets are looking a little overbought. They had such
a sharp move in such a short space of time that they are in a
need of a period of consolidation," said Mike Lenhoff, chief
strategist at Brewin Dolphin.
"But in a sense, the market doesn't want to consolidate.
The underlying tone still seems to be very firm," he said.
Although there was a lack of euro zone data, British retail
sales, housing market surveys and industrial output bolstered a
bullish view of the global economy, encouraging investors early
in Europe to push riskier assets higher.
Stock prices and higher crude prices retreated when U.S.
equity markets turned negative.
U.S. light sweet crude oil <CLc1> fell 10 cents to $58.40 a
barrel.
Gains in equity markets have also driven crude higher, with
oil and stock prices being closely correlated since stocks
bounced in April.
"Oil is riding the coat-tails of the equity market bounce
for now, largely ignoring the build-up in oil inventories,"
said Harry Tchilinguirian, senior oil analyst at BNP Paribas.
"Weakness in oil fundamentals is reflected in elevated
inventories, yet the market's price assessment appears to have
brushed this aside."
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 0.42 percent at 82.497.
Against the yen, the dollar <JPY=> fell 1.12 percent at 96.44.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
4/32 in price to yield at 3.18 percent. The 2-year U.S.
Treasury note <US2YT=RR> was break-even, yielding 0.89
percent.
Spot gold prices <XAU=> rose $9.10 to $921.70 an ounce.
Earlier in Asia, sentiment was hit by data showing Chinese
exports in April fell more steeply than expected from a year
earlier, casting fresh doubt on the prospects for recovery in
the world's third largest economy. Imports also dropped.
[]
Hopes of a recovery in China on the back of government
spending had lifted Asian equity markets from lows in early
March and added to hopes elsewhere that a global recession had
hit bottom.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> recouped some earlier losses, falling 0.7
percent. Japan's Nikkei average <> fell 1.6 percent.
(Reporting by Edward Krudy, Wanfeng Zhou, Pedro Nicolaci da
Costa in New York; Atul Prakash and Jane Merriman in London;
writing by Herbert Lash; Editing by Leslie Adler)
