* Global stocks retreat on renewed bank fears
* Dollar climbs above 101 yen, highest since October 2008
* Oil settles down at $51.05 barrel as stock rally fizzles
* Government bond prices fall as supply issuance weighs
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 6 (Reuters) - Global stocks reversed course
on Monday and fell as fading optimism over the global economy
and renewed concerns about banks prompted investors to seek the
safety of the U.S. dollar.
Oil prices fell to almost $51 a barrel, tracking the
decline in stock prices, while gold prices fell almost 3
percent with the rise in the dollar and weaker oil. For more,
see []and []
Copper ended down for the first time in five sessions,
falling 2 percent to settle at $1.9590 a pound, as a slide in
stocks rekindled concerns about demand for industrial metals
and helped offset optimism over Chinese buying. []
Renewed worries about the troubled banking sector led
investors to book gains after a sharp four-week global stock
rally, while the potential collapse of IBM's takeover of Sun
Microsystems bruised sentiment in the technology sector.
Sun fell 22.5 percent and shares of International Business
Machines <IBM.N> slipped 0.65 percent, making it one of the
biggest drags on the Dow.
Shares of big manufacturers, whose fortunes are closely
linked to the economic cycle, were among the top laggards, with
Caterpillar <CAT.N> down 2.6 percent to $31.31.
The biggest drag on the Dow was JPMorgan Chase <JPM.N>,
which fell 3.7 percent to $28.20.
Bank shares stumbled after veteran banking analyst Mike
Mayo of Calyon Securities initiated coverage on several large
banks and said the sector's problems still have further to run
and government action may not help as much as expected.
[]
Also weighing on bank shares were comments by billionaire
investor George Soros, who told Reuters Financial Television
that the "banking system as a whole is basically insolvent." He
also said the U.S. economy is in for "a lasting slowdown."
[]
"A few people came out and said the banks weren't in great
shape and that's all it's going to take," said Warren Simpson,
managing director at Stephens Capital Management in Little
Rock, Arkansas. "Uncertainty leads to fear and fear leads to
selling."
U.S. stocks closed well off their session lows, however,
after Meredith Whitney, another closely followed bank analyst,
said most banks will have made "a little bit of money" in the
first quarter and capital ratios were sure to get
better.[]
The Dow Jones industrial average <> closed down 41.74
points, or 0.52 percent, to 7,975.85. The Standard & Poor's 500
Index <.SPX> lost 7.02 points, or 0.83 percent, to 835.48. The
Nasdaq Composite Index <> shed 15.16 points, or 0.93
percent, at 1,606.71.
In late afternoon trading in New York, the euro fell 0.6
percent versus the dollar to $1.3399 <EUR=>. The ICE Futures'
dollar index, a gauge of the dollar's value against six major
currencies, was 0.7 percent higher at 84.73 <.DXY>.
"When equities move up, euro/dollar goes higher, and when
stocks move down, euro/dollar goes lower," said Greg Salvaggio,
senior vice president for capital markets at Tempus Consulting
in Washington.
U.S. Treasuries fell, pressured by looming supply and
disappointment in the market over how much debt the Federal
Reserve bought. Losses were limited as the weakness in stocks
lent some safe-haven appeal to government debt.
[]
The benchmark 10-year Treasury note <US10YT=RR> traded
11/32 lower in price to yield 2.94 percent, while the two-year
note <US2YT=RR> traded unchanged in price to yield 0.96
percent.
Benchmark euro zone government bonds pared losses after the
stock rally in Asia and early in Europe fizzled as risk
aversion seeped back into the market. []
The FTSEurofirst 300 <> index of top European shares
closed 0.7 percent lower at 766.09 points. The benchmark index
is up 18 percent since sliding to an all-time low on March 9.
"The bulls are getting a bit ahead of themselves. We're
poised for some profit taking," said Ad van Tiggelen, senior
strategist at ING Investment Management.
"We've seen a violent sector shift in a very short period,
with some cyclicals up between 50 percent and 100 percent in
about 3 weeks. But at current prices, these cyclicals are not
as cheap as they should be at this point of the cycle."
U.S. light crude for May delivery <CLc1> fell $1.46 to
settle at $51.05 a barrel. London Brent crude <LCOc1> fell
$1.23 to $52.24 a barrel.
Gold for June delivery <GCM9> declined $24.50 to close at
$872.80 in New York.
Overnight in Asia shares climbed to almost a six-month high
as hopes that the global economic downturn is nearing its
bottom spurred demand for riskier assets.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 1.8 percent, touching highs last seen on
Oct. 16, while Japan's Nikkei average <> gained 1.2
percent to a three-month closing high.
(Reporting by Richard Valdmanis, Leah Schnurr, Vivianne
Rodrigues and Chris Reese in New York; Blaise Robinson in Paris
and George Matlock in London; writing by Herbert Lash; Editing
by Leslie Adler)
