* 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
(Updates with closing prices, adds comment)
By Daniel Bases
NEW YORK, July 16 (Reuters) - Global share prices slid on
Friday after disappointing revenue reports from bellwether
U.S. corporations dovetailed with subdued U.S. inflation and
slumping consumer confidence data, driving up the price of
Treasuries as investors sought safety.
The combination of reports undermined the fragile
confidence in the global economy. On Wall Street, the three
major indexes all fell more than 2.5 percent.
Crude oil prices fell for a third straight day, and the
dollar fell to a seven-month low against the yen, a traditional
safe-haven investment.
The U.S. Labor Department reported consumer prices fell for
a third straight month in June due to lower energy costs. A
private survey showed U.S. consumer confidence dropped to an
11-month low in July. For details, see []
The fall in consumer prices comes one day after the
government reported a decline in wholesale prices. Falling
prices raise worries of a deflationary spiral in which
consumers and businesses hold off on spending because of
expectations of further price declines.
"Today's U.S. reports provided an unpleasant close to a
dismal week of data," said Mike Englund, chief economist at
Action Economics in Boulder, Colorado. "The mix leaves an
unwelcome lull in activity in the second quarter that has
apparently extended into the first month of the third
quarter."
General Electric Co <GE.N>, the largest U.S. conglomerate,
and top U.S. financial groups Bank of America Corp <BAC.N> and
Citigroup Inc <C.N> all reported declines in quarterly
revenues from the prior year. The revenues, which investors
viewed as key to providing insight into future performance,
offset the good news of rising profits.
"The next step for earnings has to be top line or revenues,
and revenues slowed down along with the consumer and the
economy in the second quarter," said Gail Dudack, chief
investment strategist at Dudack Research Group in New York.
At the close, the Dow Jones industrial average <> fell
261.41 points, or 2.52 percent, at 10,097.90. The Standard &
Poor's 500 Index <.SPX> lost 31.60 points, or 2.88 percent, at
1,064.88. The Nasdaq Composite Index <> dropped 70.03
points, or 3.11 percent, at 2,179.05.
For the week the Dow fell 0.98 percent, the S&P 1.24
percent, and the Nasdaq 0.79 percent.
GE shares fell 4.6 percent to $14.55; Bank of America lost
9.2 percent to $13.98; Citigroup lost 6.3 percent to $3.90.
The two banks also posted profit declines. []
and []
"We're at a point where the economy is supposed to be
getting stronger, but companies are finding it hard to do
about-faces in their revenue," said Bruce Zaro, chief technical
analyst at Delta Global Advisors in Boston.
European equities fell to a one-week closing low, felled by
weak bank shares. The pan-European FTSEurofirst 300 <>
index of top shares fell 2 percent to 1,012.94 points.
"The central issue is which factors have the stronger
effect on equity markets: the positive reports on earnings or
the burden due to weaker leading indicators? We think that the
negative effects from weaker economic indicators will
dominate," said Tammo Greetfeld, equity strategist at UniCredit
in Munich.
Oil giant BP's New York-listed shares lost ground, falling
4.68 percent to $37.10 while its London-listed shares closed up
1.34 percent. The U.S. shares had risen on Thursday after news
it plugged the oil leak that began in April.
The MSCI world equity index <.MIWD00000PUS> fell 2.06
percent while the Thomson Reuters global stock index
<.TRXFLDGLPU> lost 2.11 percent.
Asian stocks fell, with Japan's Nikkei average <>
dropping nearly 3 percent for its worst one-day percentage loss
in more than a month [].
GREENBACK DOWN
The U.S. dollar, while under selling pressure, did rise
from session lows as investors fled stocks for U.S. Treasuries.
The greenback slid 0.88 percent to 86.68 yen <JPY=>, off an
earlier seven-month low.
The euro touched a two-month high above $1.30 on rising
European money market rates, but slipped back as investors bet
the rise was overdone. The euro last traded down 0.12 percent
at $1.2922. Earlier it had reached a two-month high of $1.3007
<EUR=>.
Receding concerns about euro-zone sovereign debt problems
have buoyed the euro after smooth absorption of some euro-zone
government bond auctions earlier this week.
"The euro is still relatively well bid and I would not be
surprised to see 1.3200 next week as people continue to want to
get out of these mature short positions," said John McCarthy,
director of foreign exchange trading at ING Capital Markets in
New York. "It just got a little too far, too fast."
U.S. benchmark Treasuries rallied on the safe-haven
sentiment. The benchmark 10-year Treasury <US10YT=RR> rose
18/32 of a point in price to pull the yield down to 2.93
percent. The two-year Treasury <US2YT=RR> rose 1/32, yielding
0.593 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 129.16, up 36 ticks on
the day, compared with 128.80 before the data.
Crude oil <CLc1> settled down 61 cents to $76.01 per
barrel, and spot gold prices <XAU=> dropped $15.75 to a one
week low of $1,193.00.
(Additional reporting by Leah Schnurr, Nick Olivari, Ryan
Vlastelica in New York; Tamawa Desai, Atul Prakash, Neal
Armstrong in London; Editing by Leslie Adler)
