GLOBAL MARKETS-Economy fears hammer investors again

                                
 * U.S. stocks fall
                                
 * European stocks down 4.0 pct, Japan down 3.0 pct
                                
 * Oil falls to 20-month low of $58.32
                                
 * U.S. dollar recovers
                                
(Updates with late U.S. trade)
                                
 By Burton Frierson
                                
 NEW YORK, Nov 11 (Reuters) - Economic gloom overpowered
financial markets again on Tuesday, sending world stock and
commodity prices lower as the enthusiasm resulting from China's
$600 billion stimulus plan announced late Sunday fizzled out.
                                
 Further evidence of a slowing Chinese economy, the world's
fourth largest, came with data showing China's import growth
slowed in October as domestic demand cooled.
                                
 This followed Friday's dismal U.S. jobs report and both
reports overshadowed China's plan to spend nearly $600 bln to
stimulate its economy with new government spending between now
and 2010, leaving investors to brace for a long spate of weak
data.
                                
 The gloom pushed U.S. stocks down and sent oil <CLc1>,
which is heavily dependent on global growth, to a 20-month low
of $58.32 a barrel. Gold <GCc1> also took a hit while the U.S.
dollar <.DXY> was broadly firmer.
                                
 "More news is going to come out in the negative vein. You
don't know where the bottom is," said Stephen Carl, principal
and head of U.S. equity trading at The Williams Capital Group
LP in New York.
                                
 The Dow Jones Industrial Average <DJI> ended down 180.96
points or 2.04 percent at 8,689.58. The benchmark S&P500 stock
index <.SPX> fell 20.71 points or 2.25 percent to 898.50, while
the Nasdaq <.IXIC> ended down 35.98 points or 2.23 percent at
1,580.76.
                                
 BAD NEWS IS BAD NEWS
                                
 Bad news from corporate America -- General Motors <GM.N>
shares currently at a 65-year low, Goldman Sachs <GS.N> seen
posting a first-ever quarterly loss, and the second largest
U.S. electronics retailer Circuit City's <CC.N> bankruptcy
filing on Monday -- overwhelmed any optimism.
                                
 Adding to the grim tone, Merrill Lynch & Co <MER.N> Chief
Executive John Thain said the global economy is in a deep
slowdown and will not recover quickly, and the environment
recalls 1929, the advent of the Great Depression.
[ID:nN11514222]
                                
 Blaming faltering global demand, Alcoa <AA.N> cut
aluminum-making capacity worldwide. The company, a Dow
component, saw its shares slide. [ID:nSYD388798]
                                
 The diminishing appetite for risky assets, such as stocks,
roiled markets across Asia overnight and pushed European shares
down.
                                
 The pan-European FTSEurofirst 300 <.FTEU3> stock index
closed down 4.22 percent. Japan's Nikkei average <.N225> ended
down 3.0 percent.
                                
 The German government's panel of economic advisers will
forecast on Wednesday that the country will be "in recession"
next year, a source familiar with the data told Reuters on
Tuesday. [ID:nLB637411]
                                
 The U.S. government bond market was closed for Veterans
Day, depriving investors of a traditional safe haven during
times of trouble in financial markets.
                                
 Investors' fear of risky assets benefited the U.S. dollar,
which edged higher against a basket of currencies.
                                
 The U.S. Dollar Index <.DXY> was up 1.38 percent at 87.16
from a previous session close of 85.971. The euro <EUR=> was
down 1.62 percent at $1.2525 from a previous session close of
$1.2731.
                                
 The Japanese yen also rose against most currencies as
worries over slowing growth kept up the pressure to reverse
carry trade positions, where low-yielding currencies like the
Japanese currency are used to buy assets in higher-yielding
ones.
                                
 Against the Japanese yen, the U.S. dollar <JPY=> was down
0.27 percent at 97.73 from a previous session close of 97.990.
                                
 SLIPPERY SLOPE FOR OIL
                                
 Oil prices tumbled as the slide in global stock markets
refocused attention on the prospect of a deep and widespread
recession, which is likely to cut sharply into oil demand in
many developed economies.
                                
 U.S. light sweet crude oil <CLc1> fell $3.41, or 5.46
percent, to  $59.00 per barrel.
                                
 "We are expecting prices to go lower before they go higher
with U.S. crude hitting $50 before its reaches $65 again," said
Simon Wardell, oil analyst at Global Insight in London.
                                
 The origins of the current global downturn trace back to
this decade's boom and bust in the U.S. housing market.
                                
 Tumbling home prices have spread fallout through financial
markets and the economy, leading to a severe tightening of
credit that is still hurting investors far and wide.
                                
 In fact, the price of gold fell on Tuesday, due in part to
liquidation pressure because of a still-tight credit market.
                                
 Gold <XAU=> fell $12.85, or 1.72 percent, to $732.65.
                                
 (Additional reporting by Jeremy Gaunt in London and Reuters
bureaus throughout Asia, Europe and the Americas)