* Global stocks slide on economic data, ailing banks fear
* Gold futures shoot above $1,000 in flight to safety
* Government bond prices rise as risk aversion grows
* Oil slumps as deteriorating economy dents demand
(Adds close of European markets)
By Herbert Lash
NEW YORK, Feb 20 (Reuters) - Jitters about ailing banks and
worsening economies slammed global markets on Friday as
investors fled risky assets such as stocks for the relative
safety of government debt and gold, which shot above $1,000 an
ounce.
The Dow Jones industrials and European shares slid to
six-year lows, while the S&P 500, a broad measure of U.S.
equities, edged closer to breaking through November lows that
would take it to new bear market lows and a levels last seen 12
years ago.
Shares of Bank of America Corp <BAC.N> and Citigroup Inc
<C.N> plummeted amid fears that the U.S. government could
nationalize them and wipe out shareholders' equity.
A rout in bank shares and a surprise slide in euro zone
services and manufacturing activity in February, suggesting the
first quarter's economic contraction may be as bad as or worse
than the end of 2008, sent European indexes lower.
The euro surged to session highs against the dollar on the
fear of bank nationalizations after automatic buy orders were
triggered. Safe-haven buying lifted U.S. gold futures to a
seven-month high above a key psychological level of $1,000.
U.S. Treasury and euro-zone government debt prices also
rallied, driven by deepening anxiety about the fragile banks.
"The market has bigger fish to fry as it contemplates more
long weekends as big decisions on the banking sector are
confronted," said Alan Ruskin, chief international strategist
at RBS Greenwich Capital in Greenwich, Connecticut.
In early afternoon trading, the Dow Jones industrial
average <> tumbled 188.45 points, or 2.52 percent, to
7,277.50. The Standard & Poor's 500 Index <.SPX> tumbled 21.69
points, or 2.78 percent, to 757.25. The Nasdaq Composite Index
<> fell 21.50 points, or 1.49 percent, to 1,421.32.
Of the 3,138 shares that traded on the New York Stock
Exchange, 548 set new 52-week lows. Only 2 stocks rose to a
52-week high.
Bank of America shares slid more than 27 percent, while
Citigroup fell nearly 30 percent to $1.76 a share.
European shares also plunged, with the FTSEurofirst 300
<> index of top European shares falling 3.7 percent to
end at 735.74 points -- its lowest closing level since March
2003.
Safe-haven buying lifted U.S. gold futures to a seven-month
high, putting the benchmark gold contract within reach of the
record high at $1,033.90 hit in April.
"It's a direct barometer of risk aversion reaching elevated
levels," said Michael Woolfolk, senior currency strategist at
Bank of New York-Mellon in New York.
Spot gold prices <XAU=> rose 2.6 percent to $998.90, but
some expressed caution about the surge in gold prices.
"People are buying gold for emotional reasons and on
worries about bank nationalization in a reactionary move. There
are certainly smart people who are buying it and there were a
lot of smart people buying oil at $140 too," said Lawrence
Glazer, managing partner at Mayflower Advisors in Boston.
Oil prices retreated after jumping 14 percent on Thursday
on an unexpected drawdown in U.S. crude supplies. Worries about
demand for energy resurfaced, with sentiment heavily dented by
the sharp slide in the world's equity markets.
U.S. light sweet crude oil <CLc1> fell 3.7 percent to
$38.02 a barrel.
The euro <EUR=> last traded up 0.77 percent at $1.276.
Against the yen, the dollar <JPY=> was down 0.6 percent at
93.71.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 1.09 percent at 86.492.
The greenback has benefited from extreme risk aversion in
recent months as investors sought relative safety in
dollar-denominated assets such as U.S. Treasuries.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1-2/32 in price to yield 2.732 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 4/32 in price to yield 0.9076
percent.
(Reporting by Charles Mikolajczak, Chris Reese, Wanfeng Zhou
and Nick Olivari in New York, Lucia Mutikani in Washington,
George Matlock in London and Peter Starck in Frankfurt; writing
by Herbert Lash; editing by Gary Crosse)
