* MSCI world equity index slips as stocks turn south
* Index set for biggest quarterly gain since 1988 launch
* Oil slides on day but posts best qtly gain in 19 years
* Declining U.S. consumer confidence overshadows optimism
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, June 30 (Reuters) - Global stocks fell on Tuesday
after a decline in U.S. consumer confidence cast doubt about
the strength of a recovery that set MSCI's world equity index
on course for its best quarterly gain since its 1988
inception.
In a sign the worst of the credit crisis and world
recession may be passing, crude oil prices posted their
strongest quarter in 19 years, despite a 3 percent slide on
Tuesday spurred by a weaker dollar and the U.S. confidence
data.
The Conference Board's index of consumer attitudes fell
unexpectedly in June to 49.3 from a downwardly revised 54.8 in
May, helping turn European stocks lower and halt an early
sell-off in the U.S. currency.
The data also pushed U.S. stocks lower, but the benchmark
Standard & Poor's 500 Index posted its best quarterly
performance since the fourth quarter of 1998, rising 15.2
percent from April through June
It was the first positive quarterly performance of the S&P
500 since the third quarter of 2007. The CBOE Volatility Index
<.VIX>, a gauge of investor fear, had its biggest quarterly
drop since 1998, down nearly 40 percent.
The S&P 500 is up 35.9 percent since sliding to a 12-year
closing low on March 9.
Investors took heart in recent data that showed a freeing
up of credit markets, a cyclical, inventory-driven rebound in
manufacturing, an easing of the housing market slump and a
rebound in business and consumer confidence.
Authorities have gained traction against the downturn via
extraordinary monetary policies, with official interest rates
near zero and long-term borrowing rates capped by measures
known as quantitative easing.
Still, investors are questioning whether the "green shoots"
that Chairman Ben Bernanke of the Federal Reserve has used to
describe an economy on the mend are actually flourishing.
A raft of data -- Japan's jobless rate rose 5.2 percent in
May, German unemployment rose in June and loans to euro zone
businesses and households grew at the slowest pace on record in
May -- added to the gloomy mood sparked by the consumer data.
"For the market to go much higher, you are going to have to
see some real hard evidence of some of these things that are
being anticipated by the market start to come to fruition,"
said Tom Alexander, head of Alexander Trading in Savannah,
Georgia.
The Dow Jones industrial average <> closed down 82.38
points, or 0.97 percent, to 8,447.00. The Standard & Poor's 500
Index <.SPX> dropped 7.91 points, or 0.85 percent, to 919.32.
The Nasdaq Composite Index <> shed 9.02 points, or 0.49
percent, to 1,835.04.
MSCI's all-country world index <.MIWD00000PUS> fell 0.66
percent, on track to its best quarterly performance in more
than two decades. The index closes at 9 p.m.
David Resler, chief economist at Nomura Securities
International in New York, said prices may have gotten a bit
ahead of events in the last few days.
"This is a wake-up call for the stock market that the
economic recoveries typically move in fits and starts, and this
kind of (move) in consumer confidence is a revelation that it
is not all clear sailing from here," Resler said.
European shares fell on Tuesday, with the FTSEurofirst 300
<> index of top European shares off 1.1 percent to close
at 850.17. The index gained 15.9 percent in the quarter.
The simultaneous end to the month, quarter and the
half-year led to increased volatility in foreign exchange
trading, exacerbating intra-day moves in currencies.
U.S. Treasury prices softened with benchmark yields posting
their worst six-month performance in more than a decade as the
confidence data offset signs of a better-than-expected housing
market.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
15/32 in price to yield 3.54 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 1/32 in price to yield 1.12 percent.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.44 percent at 80.186.
Against the yen, the dollar <JPY=> was up 0.20 percent at
96.32.
The euro <EUR=> was down 0.35 percent at $1.4026.
Oil prices rose almost 43 percent in the second quarter,
the biggest quarterly percentage gain since 1990.
U.S. crude <CLc1> settled down $1.60 at $69.89 a barrel,
after earlier rising to an eight-month high of $73.38. London
Brent <LCOc1> gave up $1.69 to settle at $69.30 a barrel.
Copper erased earlier gains to close lower, under pressure
from a firmer dollar, quarter-end positioning and growing
perceptions that prices have risen too far in the face of a
poor fundamental backdrop.
Gold futures tumbled below $930 an ounce as a stronger
dollar prompted broad-based selling across the commodities
sector.
U.S. August futures <GCQ9> settled down $13.30 at $927.40
in New York.
Asian stocks rose on the last day of a torrid quarter, as
investors added to trades based on an economic rebound. Japan's
Nikkei share average <> finished 1.8 percent higher.
(Reporting by Rodrigo Campos, Edward Krudy, Vivianne Rodrigues
and Chris Reese in New York; Brian Gorman, Ian Chua, Joe Brock
and Nick Vinocur in London; writing by Herbert Lash; Editing by
Leslie Adler)
