* US housing data drags down Wall St, European equities
* Oil falls after inventory data
* Dollar and yen rise on safe-haven bid
By Al Yoon
NEW YORK, Oct 28 (Reuters) - World stocks slipped and the
dollar rebounded on Wednesday as disappointing data on the U.S.
housing market investors raised worries about global growth,
driving investors to less risky assets.
The yen and the U.S. dollar edged higher as traders flocked
to the two traditional safe-havens and reduced exposure to
currencies perceived as riskier.
Oil fell below $78 a barrel after a surprise build in U.S.
gasoline stocks increased doubts over demand from the world's
largest fuel consumer.
European shares slid to their lowest close in three weeks,
led by sharp falls in banking shares after Banco Santander
reported a 2.8 percent fall in net profit.
The U.S. housing data also dragged on European equities and
drove Wall Street lower, with the Nasdaq falling more than 2
percent.
The U.S. government reported sales of new homes in
September unexpectedly tumbled. The data added to concerns that
major stock indexes had rallied too far given a still-soft
economic outlook.
"The (housing) number was surprisingly weak. I think that
is going to add to the trend that we've seen recently where
investors are questioning the robust pace of economic recovery
going forward," said Joe Manimbo, currency trader at Travelex
Global Business Payments in Washington.
"That has benefited the dollar and helped to revive its
safe-haven appeal."
The Dow Jones industrial average <> fell 67.56 points,
or 0.68 percent, to 9,814.61. The Standard & Poor's 500 Index
<.SPX> lost 14.57 points, or 1.37 percent, to 1,048.84. The
Nasdaq Composite Index <> gave up 43.24 points, or 2.04
percent, at 2,072.85.
Among U.S. financial shares, JPMorgan Chase & Co <JPM.N>
fell 2.7 percent to $42.73 and Bank of America Corp <BAC.N>
lost 2.4 percent, to $15.07.
The pan-European FTSEurofirst 300 index <> closed
down 1.8 percent to 981.65 points, its lowest close since Oct.
5. Banco Santander <SAN.MC> declined 3.9 percent.
Ireland's two main banks, Allied Irish Banks <ALBKI.I> and
Bank of Ireland <BKIR.I> plunged 11.9 percent and 25 percent,
respectively, on uncertainty over Dublin's bank rescue
measures.
The MSCI's all-country world stocks index <.MIWD00000PUS>
shed 1.58 percent to 284.93. Japan's Nikkei <> declined
1.35 percent to 10,075.05.
"The market has taken off its rose-colored glasses," said
Heinz-Gerd Sonnenschein, an equity strategist at Postbank.
In foreign exchange, the yen and U.S. dollar gained with
the softened outlooks on global growth and on weaker stocks.
The dollar rose 0.25 percent versus a basket of major
currencies <.DXY>. The euro fell 0.34 percent to $1.4758, while
against the yen the dollar declined 0.77 percent to 91.08 yen.
The yen and dollar were boosted as investors shunned the
Australian dollar, which fell after Australian inflation data
suggested the country's central bank was unlikely to tighten
interest rates sharply.
Euro zone government bonds and U.S. Treasuries gained
traction on a safety bid on the back of the U.S. new home sales
report and falling equities.
Price gains for the benchmark 10-year Treasury note pushed
its yield down 0.04 percentage point to 3.41 percent. Strong
demand for a U.S. Treasury debt auction on Tuesday allayed
concerns about the cumulative impact of $123 billion in U.S.
government bond sales this week.
"With the global tone of equity markets weakening we think
a bullish fixed income correction is becoming increasingly
likely," analysts at Societe Generale said in a client note.
Oil fell $1.69 per barrel to $77.86, after a U.S. inventory
report showed a surprise increase in gasoline stocks, giving
credence to the broader theme of a sluggish rebound for the
world's largest fuel consumer.
(Editing by Leslie Adler)
