(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
* Global stocks slide on fears economic growth is slowing
* Dollar benefits from global jitters; euro at 8-month low
* Oil slips on slowing U.S. demand, little Gustav damage
NEW YORK, Sept 3 (Reuters) - The dollar surged to an
eight-month high on Wednesday as recession fears in Europe sank
stocks and oil but added strength to the U.S. currency.
Slowing demand in the United States and other consuming
nations weighed on oil prices, which fell more than $2 a barrel
before paring some losses. Signs that the U.S. oil sector would
quickly recover from Hurricane Gustav also pulled down prices.
Energy futures were also hurt by the rising dollar, which
extended a recent bull run on growing expectations the U.S.
economy will outperform growth in Europe, where the day's data
underscored a weakening economy.
Fears of a global economic slowdown swept losses through
equity markets in Asia, Europe and the Americas.
Investors sold bellwether stocks like Intel Corp <INTC.O>
and International Business Machines Corp <IBM.N> because
technology is seen as having the most exposure to the global
economy.
Intel was off 2 percent and IBM 1.4 percent.
The extended fall in oil prices, now nearly 30 percent
since reaching the all-time high of $147.27 a barrel in July,
suggested the global economic outlook is slowing as demand for
energy ebbs.
"There are a lot of cross currents," said Brian Gendreau,
investment strategist at ING Investment Management in New York.
"Global growth is still a concern. Now we are seeing weakening
growth in Europe and, to a lesser extent, Japan and now even
emerging markets.
Stocks have been boosted recently by the easing of oil
prices, although Gendreau added that if slack demand is what is
driving oil "that isn't necessarily good for stocks."
Shares of Corning <GLW.N>, the world's largest maker of
glass for liquid crystal televisions and computers, slid 8.6
percent after the company slashed its third-quarter profit
outlook.
Qualcomm's <QCOM.O> shares fell 2.1 percent after the its
chief executive said on CNBC the chip maker was seeing some
signs of customers slowing their cell phones upgrades.
Before 1 p.m., the Dow Jones industrial average <> was
down 69.61 points, or 0.60 percent, at 11,447.31. The Standard
& Poor's 500 Index <.SPX> was down 10.20 points, or 0.80
percent, at 1,267.38. The Nasdaq Composite Index <> was
down 22.77 points, or 0.97 percent, at 2,326.47.
News of the demise of a hedge fund partly owned by Wall
Street firm Lehman Brothers <LEH.N> rattled investors and
weighed on banking shares. Hedge fund manager Ospraie
Management LLC will close its flagship fund after it plunged 27
percent in August on losses in energy, mining and natural
resources equity holdings.
European stocks retreated, ending at their lowest closing
level in a week.
Data showed that falling investment and private consumption
led to the first ever quarterly contraction in the euro zone
economy from April to June, while July retail sales and August
services sentiment signaled more weakness ahead. The 15-country
euro zone reported its economy shrank 0.2 percent in the second
quarter.
Tech and consumer-related shares lost ground, dragged down
by worries about the outlook in the euro zone.
Nokia <NOK1V.HE> fell 4.6 percent, LVMH <LVMH.PA> lost 2.7
percent, Unilever <ULVR.L> dropped 3.3 percent and Danone
<DANO.PA> shed 4.4 percent.
"The economic environment remains gloomy, especially in the
euro zone where we're getting a flow of negative news. The euro
zone is suffering more from the U.S. downturn than people had
initially thought," said Romain Boscher, head of equity
management at Groupama Asset Management, in Paris.
The FTSEurofirst 300 <> index of top European shares
closed 1.5 percent lower at 1,181.90 points.
U.S. Treasury debt prices edged up, pushing benchmark
yields down near four-month lows as weaker oil prices eased
bond investors' inflation expectations.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
6/32 to yield 3.71 percent. The 30-year U.S. Treasury bond
<US30YT=RR> rose 11/32 to yield 4.34 percent.
Investors awaited interest rate decisions by both the Bank
of England and the European Central Bank on Thursday.
Although the ECB is expected to keep benchmark borrowing
costs at 4.25 percent, the focus will be on President
Jean-Claude Trichet who might provide clues on the outlook for
rates.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.17 percent at 78.172. Against the yen,
the dollar <JPY=> was down 0.33 percent at 108.28.
The euro <EUR=> was down 0.31 percent at $1.447.
Oil fell almost $1 a barrel.
U.S. light sweet crude oil <CLc1> fell $1.18 to $108.53 per
barrel.
Spot gold prices <XAU=> fell $2.10 to $802.40 an ounce.
MSCI's index of Asia stocks outside Japan <.MIAPJ0000PUS>
was 1.5 percent lower, dragged down by resource-related stocks
in the main Hong Kong <>, Singapore <.FTSTI> and Sydney
<> indexes.
Japan's Nikkei average <> closed up 0.6 percent as the
prospect of cheaper fuel and lower inflation boosted some
stocks.
(Reporting by Ellis Mnyandu, John Parry and Wanfeng Zhou in
New York; Matthew Robinson, David Sheppard and Ian Chua in
London and Blaise Robinson in Paris)
(Reporting by Herbert Lash)
