* Unexpected drop in US consumer sentiment raises concerns
* Stocks, oil slip; Treasuries, yen firm on safe-haven bid
* Muted U.S. inflation reinforces bets on low Fed rates
(Updates with U.S. markets, changes byline, dateline, previous
LONDON)
By Walter Brandimarte
NEW YORK, Aug 14 (Reuters) - Global stocks slid on Friday
after U.S. consumer sentiment unexpectedly worsened in August,
rekindling appetite for safe-haven assets such as U.S.
Treasuries and the Japanese yen.
Oil prices also fell as much as $3 a barrel as the
Reuters/University of Michigan Surveys of Consumers showed a
growing number of Americans were worried about their finances,
even though they expected the broader economy to improve.
The poor data eclipsed reports that showed U.S. industrial
output gained for the first time in nine months and that
inflation was muted in July. For details see [].
"Clearly bad news this morning, so the market is going to
go down," said Stephen Massocca, managing director with Wedbush
Morgan in San Francisco.
"People have significant doubt about how enduring any
recovery is going to be without the consumer," he added.
The benchmark MSCI world equity index <.MIWD00000PUS> fell
1 percent after gaining nearly 2 percent the past two sessions.
The index has gained more than 45 percent since its March low.
The Dow Jones industrial average <> lost nearly 1.4
percent to 9,268.35, as the preliminary reading of the index of
U.S. consumer confidence for August fell to 63.2 from 66.0 in
July, well below market expectations for a reading of 68.5.
The Standard & Poor's 500 Index <.SPX> declined over 1.4
percent to 997.85, while the Nasdaq Composite Index <> was
down almost 1.8 percent at 1,973.80.
The pan-European FTSEurofirst 300 <> index slid 0.8
percent to 940.94, ending the week about 1 percent lower after
four straight weeks of gains.
Emerging-market stocks posted smaller losses, with the
benchmark MSCI index for the asset class <.MSCIEF> down 0.6
percent.
News that U.S. industrial output rose 0.5 percent in July,
above expectations for 0.3 percent advance and following a 0.4
percent contraction in June, curbed stock market losses.
Still, concerns about the strength of the U.S. economic
recovery sent U.S. crude oil prices down more than $3 around
mid-session. In early afternoon, crude for September delivery
<CLU9> was down $2.65, or 3.76 percent, at $67.87 per barrel.
The yen rallied as investors' tolerance of risk decreased.
The dollar <JPY=> was down 0.7 percent against the Japanese
currency at 94.71. The euro <EUR=>, however, firmed 0.4 percent
against the dollar at $1.4226.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
17/32 in price to yield 3.54 percent after the Labor Department
said U.S. consumer prices were flat in July and fell over the
past 12 months at the fastest rate since 1950. Yields on
10-year notes had closed at 3.60 percent on Thursday.
The 30-year U.S. Treasury bond <US30YT=RR> was up 29/32,
yielding 4.39 percent from Thursday's close of 4.43 percent.
The contained inflation reading helped depress yields by
reinforcing a view that the Federal Reserve -- the U.S. central
bank -- will maintain benchmark interest rates near zero for a
long time even after the economy emerges from recession.
"The pop (in Treasury prices) was related to a really soft
inflation reading," said William Hornbarger, senior fixed
income strategist with Wells Fargo Advisors in St. Louis,
Missouri.
(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
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Additional reporting by Chuck Mikolajczak and Richard Leong
in New York and Carolyn Cohn and Brian Gorman in London;
Editing by James Dalgleish)
