GLOBAL MARKETS-Weak US data slaps stocks lower, bonds rise

                                
 * U.S. consumer prices and confidence drop
                                
 * Global shares fall on concerns for global economy
                                
 * Government debt gains on safe-haven flows
                                
 * Oil and gold prices fall
                                
 By Daniel Bases
                                
 NEW YORK, July 16 (Reuters) - Global share prices fell and
the U.S. dollar extended its decline against the yen after
subdued U.S. inflation and slumping consumer confidence reports
undermined a still fragile global economy.
                                
 Rising corporate profits at a smattering of large
multinational companies initially lifted stocks, but once
investors parsed the reports and were disappointed with
revenues, shares turned lower.
                                
 Government debt prices rose after the U.S. Labor Department
reported consumer prices fell for a third straight month due to
lower energy costs. A second report showed U.S. consumer
confidence dropped to an 11-month low. For details, see
[ID:nN1653074]
                                
 Lack of pricing power knocked oil prices lower for a third
straight day and spot gold broke back below $1,200 an ounce.
                                
 "Thank God people are smoking because the boost in tobacco
prices is keeping us away from deflation," Cary Leahey,
economist at Decision Economics in New York said of the
inflation data that was below forecasts.
                                
 "The (U.S. Federal Reserve), in aiming for a 1 to 2 percent
target inflation rate, now has the problem that in the
aftermath of the worst downturn in 75 years, inflation just
won't stop moving toward zero. Those inflation boundaries were
too low," Leahey said.
                                
 In early Wall Street trade, the Dow Jones industrial
average <.DJI> fell 160.98 points, or 1.55 percent, at
10,198.33. The Standard & Poor's 500 Index <.SPX> lost 18.68
points, or 1.70 percent, at 1,077.80. The Nasdaq Composite
Index <.IXIC> dropped 40.34 points, or 1.79 percent, at
2,208.74.
                                
 Conglomerate General Electric Co <GE.N>, Bank of America
Corp <BAC.N> and Citigroup Inc <C.N> reported second-quarter
earnings that beat expectations, but the stocks slid after
revenues fell from the prior year.
                                
 The two banks also posted profit declines. [ID:nN16144753]
and [ID:nN16265934]
                                
 GE shares fell 3.2 percent to $14.76; Bank of America lost
7.2 percent to $14.28; Citigroup lost 4.5 percent to $3.97.
                                
 European shares followed suit, falling from their highs of
the day. The pan-European FTSEurofirst 300 <.FTEU3> index of
top shares fell 1.59 percent to 1,017.08 points.
                                
 Oil giant BP's New York listed shares lost ground, falling
3.6 percent to $37.52 while its London-listed shares rose 1.56
percent. The U.S. shares had soared 7.6 percent late on
Thursday after news it plugged the oil leak that began in
April.
                                
 The MSCI world equity index <.MIWD00000PUS> fell 1.31
percent while the Thomson Reuters global stock index
<.TRXFLDGLPU> lost 1.39 percent.
                                
 Asian stocks fell, with Japan's Nikkei average <.N225>
dropping nearly 3 percent for its worst one-day percentage loss
in more than a month [.T].
                                
 GREENBACK DOWN
                                
 The U.S. dollar stayed under pressure, slipping 0.15
percent to 2-1/2 month lows versus a currency basket <.DXY>
made up of its major trading partners.
                                
 The greenback slid 1.12 percent to 86.47 yen <JPY=>, a
seven-month low, while the euro lost most of its gains to trade
nearly flat at $1.2939. Earlier it had reached a two-month high
of $1.3007 <EUR=>. The euro climbed 1.6 percent against the
U.S. dollar on Thursday.
                                
 Receding concerns about euro-zone sovereign debt problems
have buoyed the euro after smooth absorption of some euro-zone
bond auctions earlier this week.
                                
 Analysts said further weakening in the dollar versus other
major currencies, particularly the euro, could be limited.
                                
 "The dollar's adjustment can be justified as the Fed may
have to do more easing, but in the longer term it could start
to benefit from safe-haven flows," said Jane Foley, research
director at Forex.com in London.
                                
 "If the Fed isn't going to hike, it's hard to see the ECB
(European Central Bank) hiking first," she added.
                                
 U.S. benchmark Treasuries rallied on safe-haven sentiment.
The benchmark 10-year Treasury <US10YT=RR> rose 12/32 of a
point in price to pull the yield down to 2.95 percent. The
two-year Treasury <US2YT=RR> stood unchanged, yielding 0.606
percent after falling to a record low of 0.58 percent on
Thursday.
                                
 European government debt rose on the U.S. data. The
September Bund future <FGBLU0> rose to 129.15, up 39 ticks on
the day, compared with 128.80 before the data.
                                
 Crude oil <CLc1> fell 45 cents to $76.17 per barrel, and
spot gold prices <XAU=> fell $15.45 to  $1192.10.
 (Additional reporting by Ellen Freilich, Nick Olivari, Ryan
Vlastelica in New York; Tamawa Desai, Atul Prakash, Neal
Armstrong in London; Editing by Kenneth Barry)