* Global stocks trim losses on White House bank comment
* Gold climbs 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 U.S. markets)
By Herbert Lash
NEW YORK, Feb 20 (Reuters) - Fear of bank nationalizations
and more weak economic data battered global markets on Friday,
with stock markets plunging worldwide and investors moving into
safe havens, driving up the price of gold to over $1,000 an
ounce.
U.S. stocks were saved from closing on their lows for the
session when the White House said late in the day that it still
backed a privately held banking system, despite concern about
the erosion of banks' capital.
But financial markets remain concerned that the global
economic slump, sparked in mid-2007 by falling U.S. housing
market, is continuing to take its toll on banks, despite
efforts by many governments to shore up their banking systems.
Former Federal Reserve Chairman Paul Volcker, now a top
adviser to President Barack Obama, said the global economy may
be deteriorating even faster than during the Great Depression.
"There's a little bit of panic out there. Equities are
setting new lows and gold is the place to run to," said Robert
MacIntosh, chief economist at Eaton Vance in Boston.
Gold futures for April delivery <GCJ9> in New York settled
up $25.70 at $1,002.20 an ounce.
The White House support for keeping major U.S. banks in
private hands came just as S&P 500 index, a broad measure of
the U.S. equity market, was poised to break the 11 year lows
seen last November.
Also, CNBC television reported that the U.S. Treasury will
provide some details on the Obama administration's bank rescue
next week, helping financial shares cut losses.
[]
Crude oil trimmed losses that had pushed prices below $38 a
barrel, U.S. Treasuries prices gave back a strong advance, and
the stock price of Bank of America Corp <BAC.N> recouped most
of a plunge of more than 30 percent to close down 3.6 percent.
Citigroup Inc <C.N> also trimmed a sharp decline, but still
closed down 22 percent at $1.95 a share, the first time it has
closed under $2 since January 1991.
The Dow Jones industrial average <> closed down 100.28
points, or 1.34 percent, at 7,365.67. The Standard & Poor's 500
Index <.SPX> shed 8.89 points, or 1.14 percent, at 770.05. The
Nasdaq Composite Index <> fell 1.59 points, or 0.11
percent, at 1,441.23.
Of the 3,177 stocks that trade on the New York Stock
Exchange, 590 set 52-week lows while three set 52-week highs.
The U.S. dollar ended lower against major currencies as
investors sought to lock in the currency's recent steep gains
ahead of the weekend. 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 dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 1.09 percent at 86.49.
Against the yen, the dollar <JPY=> fell 1.20 percent at 93.15.
The euro <EUR=> was up 1.41 percent at $1.2841.
A worsening global economic outlook continued to weigh on
oil prices. []
U.S. crude futures for March delivery <CLc1>, which expire
on Friday, settled at $39.28 a barrel, down 54 cents. April
Brent crude settled at $41.89 a barrel, down 10 cents.
Deepening anxiety about ailing banks spurred a rally in
U.S. and euro-zone government debt prices.
"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.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
20/32 in price to yield 2.78 percent. The 2-year U.S. Treasury
note <US2YT=RR> added 2/32 in price to yield 0.9484 percent.
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.
European shares 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.
(Reporting by Ellis Mnyandu, Chris Reese, Wanfeng Zhou, Nick
Olivari, Rebekah Kebede and Frank Tang in New York, Lucia
Mutikani in Washington, Jan Harvey and George Matlock in London
and Peter Starck in Frankfurt; writing by Herbert Lash)
