* Global shares fall on dour U.S., euro zone data
* Dollar rallies after dismal U.S. retail sales data
* Government debt rallies on retail sales, BoE outlook
* Oil rises after EIA says U.S. crude inventories fall
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, May 13 (Reuters) - Global stocks fell on
Wednesday after reports of declining U.S. retail sales and
falling output in Europe dimmed hopes for a rapid economic
recovery, spurring demand for safe-haven gold and government
debt.
The U.S. dollar rallied against most major currencies after
news of the unexpected drop in U.S. retail sales in April
reminded investors of the rocky road to recovery for a global
economy mired in its worst recession in decades.
But oil prices edged higher after a U.S. government report
showed a surprise drop in crude inventories in the world's top
consumer.
U.S. gold futures rose above $930 an ounce, trading at a
one-month high, while U.S. and euro zone government debt prices
rose.
European stock indices closed down more than 2.0 percent,
while major U.S. and global equity indexes were down 2.0
percent or more at 1 p.m. (1700 GMT). MSCI's all-country index
<.MIWD00000PUS> was off 2.1 percent.
"I have become a little bearish here," said Carl
Birkelbach, head of Birkelbach Management in Chicago.
At 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was down 179.68 points, or 2.12 percent, at 8,289.43.
The Standard & Poor's 500 Index <.SPX> was down 22.68 points,
or 2.50 percent, at 885.67. The Nasdaq Composite Index <>
was down 43.76 points, or 2.55 percent, at 1,672.16.
Shares in Wal-Mart Stores Inc <WMT.N>, the world's biggest
retailer and a bellwether for the retail sector, fell 1.5
percent while Macy's Inc <M.N> fell 3.3 percent. The department
store chain stuck to its full-year outlook for a decline in
sales. The S&P retail index <.RLX> fell 2.2 percent.
Analysts had forecast no change in U.S. retail sales or
even a small increase after disastrous car sales were excluded.
The U.S. Commerce Department said total retail sales slipped
0.4 in April after a 1.3 percent decline in March.
[]
European shares fell for a third straight session, led
lower by financials and mining stocks, notably Rio Tinto
<RIO.L>, on investor caution after recent strong gains.
ING Group <ING.AS> fell 10.3 percent after reporting a
bigger-than-expected first-quarter net loss, hurt by a sharply
weaker insurance business.
UBS <UBSN.VX> fell 10.1 percent after a Swiss National Bank
board member said he wanted UBS to be smaller in the future.
Rio Tinto lost 10.6 percent amid speculation about a rights
issue.
The FTSEurofirst 300 <> index of top European shares
closed down 2.5 percent at 831.71 points, its lowest close
since May 1.
Weighing on sentiment was data showing euro zone industrial
production plummeted a record 20.2 percent in March from a year
ago, indicating first-quarter economic output may have shrunk
more than expected. Output fell 2.0 percent from February.
[]
The Eurostat data offered little cause for optimism about
"green shoots" of economic recovery as some business surveys
have suggested, while the Bank of England said Britain's
recovery would be slower than previously forecast.
[]
The dollar, which rose from four-month lows, was up against
a basket of major currencies, with the U.S. Dollar Index <.DXY>
up 0.28 percent at 82.532. Against the yen, the dollar <JPY=>
was down 0.64 percent at 95.79.
The euro <EUR=> fell 0.31 percent at $1.3601.
"The 'green shoots' rally was ready for a bit of a
correction and we already started to see that overnight. This
report is likely going to feed into it," said Michael Woolfolk,
senior currency strategist at Bank of New York Mellon in New
York.
"This naturally gives the bond market a chance to rally."
The benchmark 10-year Treasury note <US10YT=RR> was up
23/32 in price to yield 3.09 percent versus 3.18 percent late
on Tuesday.
The 30-year long bond <US30YT=RR> was up 47/32 in price to
yield 4.08 percent.
Crude inventories fell by 4.7 million barrels, the U.S.
Energy Information Administration said, a day after the
American Petroleum Institute reported a drop in stockpiles.
[] Analysts had forecast stocks would rise.
"The amazing run over the last months on building crude
stocks had to come to an end. We're starting to feel the impact
of OPEC production cuts," said Phil Flynn, analyst at Alaron
Trading in Chicago.
U.S. crude for June <CLc1> rose 1.0 cent at $58.86 a
barrel. In London, Brent crude <LCOc1> was down 7 cents to
$57.87.
Gold pared some gains, with spot prices <XAU=> up $3.50 to
$925.35 an ounce.
The energy sector was the main gainer in the MSCI index of
Asia Pacific shares traded outside Japan <.MIAPJ0000PUS>, which
rose 0.8 percent, just below a seven-month high struck on
Monday. The index has gained 45 percent since March lows.
Japan's Nikkei share average <> edged up 0.5 percent
in choppy trade.
(Reporting by Edward Krudy, Gertrude Chavez-Dreyfuss, Burton
Frierson and Frank Tang in New York; Jamie McGeever and Alex
Lawler in London and Peter Starck in Frankfurt; writing by
Herbert Lash)
