By Jeremy Gaunt, European Investment Correspondent
LONDON, March 7 (Reuters) - Fears about U.S. recession,
increased credit woes and a sinking dollar battered world stocks
on Friday while oil remained stubbornly above $100 a barrel and
investors sought safety in government bonds.
The dollar fell to more all-time lows low against major
currencies, including the euro, which hit a record beyond $1.54.
Investors were focused on key U.S. jobs data later in the
day for a steer on likely interest rate moves from the U.S.
Federal Reserve but also on the depth of the U.S. economic
decline.
"Markets are braced for a rather bad employment number
today. These ongoing recessionary worries are hitting risk
appetite across the board," said Geoffrey Yu, a currency
strategist at UBS in Zurich.
Overnight losses on Wall Street -- where the S&P 500 <.SPX>
fell 2.2 percent -- spilled over to the rest of the world.
MSCI's main world stock index <.MIWD00000PUS>, a benchmark
for many professional investors, lost 1 percent while its
emerging market counterpart <.MSCIEF> sank 2.2 percent.
The pan-European FTSEurofirst 300 <> was down nearly 1.6
percent. Earlier, Japan's Nikkei average <> closed down
3.27 percent.
"Turmoil, turmoil, turmoil," said Howard Wheeldon, senior
strategist at brokers BGC Partners. "The key to unlocking the
door and finding a way out can only be central banks coming
together."
Among the factors hitting sentiment was a renewal of fears
about credit market losses.
News that Thornburg Mortgage Inc <TMA.N>, a "jumbo" U.S.
mortgage lender, was in default after failing to meet creditor
demands for more upfront cash hit on Thursday.
Another report showed U.S. mortgage foreclosures hit a
record high in late 2007.
The February U.S. jobs data, meanwhile, is expected by
economists to show a rise of just 25,000 jobs, basically flat
given the size of the population.
SINKING DOLLAR
The dollar tumbled to all-time lows again, with the euro
<EUR=> powering to $1.5429 before easing back slightly to around
$1.5388.
The euro was boosted by the European Central Bank's signal
on Thursday that it was in no hurry to start cutting rates in a
month when the U.S. Federal Reserve is seen slashing them by 75
basis points.
The dollar also fell to an all-time low against the
so-called dollar index <.DXY>, a trade-weighted basket of six
major currencies, at 72.698 before lifting itself slightly off
the low. It has lost nearly 19 percent against this index over
the past two years.
The greenback also set a 3-year low around 102.11 yen
<JPY=>.
All this drove investors into safe havens. Two-year euro
zone government bond yields <EU2YT=RR> were down 10 basis points
at 3.211 percent as prices rose on demand.
The benchmark 10-year bond yield <EU10YT=RR> was up 4 basis
points at 3.751 percent.
Demand for gold remained strong at around $978 an ounce,
although it was off its record high of $991.90 an ounce hit
during the day on Thursday.
Oil prices eased a little but were still at near-record
highs above $104 a barrel.
