* Wall Street slips amid persistent recovery worries
* Oil, other commodities also slide on economic concerns
* U.S. dollar gains vs euro on rising risk aversion
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, July 7 (Reuters) - Oil prices fell and global
stocks tumbled on Tuesday as talk of a second U.S. government
stimulus plan heightened persistent concerns about prospects
for an economic recovery.
A breach of a key technical support of the Standard &
Poor's 500 Index <.SPX> below the 885 level accelerated a
late-day sell-off in U.S. equities, driving benchmark yields on
U.S. Treasuries to six-week lows.
The Dow and S&P 500 fell to their lowest levels in 10
weeks, with both closing down just shy of 2 percent.
The yen gained as caution was the order of the day before
the start of the release of U.S. corporate earnings for the
second quarter, which will kick off with Alcoa Inc <AA.N> after
markets close on Wednesday.
The yen's safe-haven appeal rose on uncertainty about the
global economic outlook. The price of copper and other
commodities fell, while U.S. gold futures edged higher.
"We've been getting very mixed signals, with some positive
data and some very poor data, so it's extremely difficult to
pinpoint direction," said Fabian Eliasson, vice president of
currency sales at Mizuho Corporate Bank in New York.
"As a result, people are backing out of high-yield assets
and into the yen and dollar. Now, the focus will turn to
corporate earnings as the main driver for the market."
S&P on Tuesday said that the charge-off rate, or loans that
banks do not expect to be repaid, of bank-issued U.S. credit
cards rose to a record in May as unemployment hit a 26-year
high.
WORRIES ON EARNINGS
Investors worried about an anemic second-quarter earnings
season even as Alcoa's chief executive said China was growing
again.
Alcoa CEO Klaus Kleinfeld told Bloomberg Television he was
"very optimistic" on sales as the Chinese economy and some U.S.
industries start to recover.
The Dow component is expected to post a third consecutive
quarterly loss. For an Alcoa preview, see [].
"Prices seem to have stalled in both equity and commodity
markets ... as this recovery hasn't come through perhaps as
quickly as everyone has wanted," said Robin Bhar, senior metals
analyst at Calyon. "There are some doubts as to whether growth
is beginning to peter out."
Cyclical stocks in the materials, energy, and industrial
sectors fell after riding a recent upswing in commodity prices,
which eased as hopes dimmed of a quick recovery. Copper, a
barometer of global economic strength, fell nearly 2 percent.
Caterpillar Inc <CAT.N>, a maker of heavy machinery for
construction and mining companies, shed 4.5 percent.
The Dow Jones industrial average <> closed down 161.27
points, or 1.94 percent, at 8,163.60. The S&P 500 fell 17.69
points, or 1.97 percent, at 881.03. The Nasdaq Composite Index
<> shed 41.23 points, or 2.31 percent, at 1,746.17.
Investors shrugged off data that showed orders in Germany,
Europe's largest economy, rose at the strongest monthly pace in
nearly two years in May. But economists said the yearly
comparison would remain weak for some time. []
Disappointing UK industrial output data pulled shares lower
in London, with utilities among top European decliners.
The FTSEurofirst 300 <> index of top European shares
closed 0.8 percent lower at 826.36 points. The FTSE 100 <>
closed down 7.91 points at 4,817, a fresh two-month low.
British manufacturing output unexpectedly fell 0.5 percent
in May, official data showed, making it less likely the economy
returned to growth in the second quarter. []
Copper prices turned negative as concerns over demand and
world growth persisted. []
Oil fell. U.S. crude futures <CLc1> settled down $1.12 at
$62.93 a barrel as investors sought safer havens. London Brent
crude <LCOc1> fell 82 cents to settle at $63.23 a barrel.
But U.S. gold futures ended higher. The August contract
<GCQ9> settled up $4.80 at $929.10 an ounce in New York.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.35 percent at 80.658.
The euro <EUR=> was down 0.36 percent at $1.3923, while
against the yen, the dollar <JPY=> fell 0.64 percent at 94.75.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
16/32 in price to yield 3.45 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 2/32 in price to yield 0.97 percent.
Asian stocks edged up slightly but struggled, with the MSCI
index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS>
rising 0.1 percent. Japan's Nikkei share average <> dipped
0.3 percent as a stronger yen hit exporter shares.
(Reporting by Rodrigo Campos, Nick Olivari, Richard Leong,
Ellen Freilich in New York; Atul Prakash, Joe Brock, Ikuko Kao,
Rebekah Curtis and Michael Taylor in London; writing by Herbert
Lash; Editing by Leslie Adler)
