* Economic worries hit stocks, lift dollar and yen
* Wall Street set for losses
* European stocks down 1.6 pct, Japan down 1.4 pct
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 6 (Reuters) - Second thoughts about the U.S.
economy's ability to recover soon hit global stocks on Monday,
set Wall Street up for likely losses at the open and gave the
dollar a boost.
Investors were shaken late last week by a dismal U.S.
payrolls report which put a question mark over the recovery in
the dominant economy, and thus across the globe.
"Doubts about the speed of global economic recovery are
leading participants to question equity market valuations ahead
of U.S. Q2 earnings season," Lloyds TSB economist Kenneth Broux
said in a note.
U.S. corporate reporting begins in earnest next week, but
there will be a foretaste on Wednesday when aluminium giant
Alcoa <AA.N> reports. []
Global stocks as measured by MSCI <.MIWD00000PUS> were down
0.9 percent and the emerging market sub-sector <.MSCIEF> lost
more than 1.5 percent.
In Europe, the FTSEurofirst 300 <> was at a seven-week
low, dropping 1.6 percent, and earlier Japan's Nikkei average
<> closed down 1.4 percent.
"There's a feeling corporate results are still going to be
poor," said Justin Urquhart-Stewart, investment director at
Seven Investment Management, in London. "People are asking where
the growth is going to come from. They're looking at data and
noticing it's still getting worse," though not at the same rate
as before, he added.
G8 AHEAD
The dollar was generally stronger, rising half a percent
against a basket of major currencies <.DXY>, although it fell
against the Japanese yen which tends to gain when investors
start worrying about economic growth.
The U.S. currency was down around three-quarters of a
percent at 95.30 yen <JPY=>. The euro lost half a percent to
$1.3893 <EUR=>.
"Demand for the safer dollar and the yen is returning as
investors are wondering whether there are any economies besides
China that are strong enough to lead a global recovery," said
Jun Kato, senior chief analyst at the Shinkin Central Bank
Research Institute.
The market is also focused on a Group of Eight (G8) meeting
on July 8-10 for any further debate on currency diversification.
China, which has floated the idea of looking for an
alternative to the dollar as a global reserve currency, said the
greenback would retain its global dominance for years to come,
playing down the likelihood of any change in the current
situation. []
Euro zone government bond prices rose. The 10-year bond
<EU10YT=RR> yield lost two basis points to 3.313 percent.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub
click on http://blogs.reuters.com/hedgehub)
