* Stocks slump worldwide as growth reassessed
* Dollar recovers vs euro, but loses ground to yen
* Gold edges further from record high, seen firm still
(Updates with U.S. markets, changes byline, dateline; previous
LONDON)
By Al Yoon
NEW YORK, Nov 19 (Reuters) - Shares slumped globally on
Thursday and the dollar gained against the euro as investors
reassessed optimistic expectations for a rebound in world
economic growth.
The dollar bounced further from 15-month lows, forcing gold
lower. The risk correlation between assets -- where the dollar
falls when investors buy riskier assets and vice versa --
remained in place.
Investors are gripped by uncertainty over the global
economy's future and the tendency to lock in some profits
before the end of the year. Rising U.S. unemployment and
concerns some European economies may slip further in 2010 may
also mean that a 71 percent gain seen across world stocks since
March and a rally in the euro have gone too far.
"We're running out of gas as far as the economic recovery
momentum goes," said Boris Schlossberg, director of currency
research at GFT Forex in New York.
The U.S. dollar and the yen climbed, with major European
currencies and the New Zealand and Australian dollars being the
biggest losers. Despite the dollar's strength, it has still
lost about 20 percent versus the euro since early March.
The euro <EUR=> was down 0.4 percent at $1.4902 at 1:03
p.m. (1801 GMT) in New York while the dollar lost 0.6 percent
to 88.87 yen <JPY=>.
The dollar index, which tracks the currency against six
other major currencies, rose 0.2 percent <.DXY>.
World stocks dipped 1.7 percent as measured by MSCI
<.MIWD00000PUS>. They hit a year high on Monday, since when
they have fallen more than 2 percent.
In the U.S. market, falling technology and basic materials
stocks led the downturn after Bank of America-Merrill Lynch cut
its 2010 growth outlook for the semiconductor industry.
Analysts downgraded 10 stocks, including Intel Corp <INTC.O>
and Texas Instruments Inc <TXN.N>.
In mid-afternoon trading, the Dow Jones industrial average
<> was down 138.45 points, or 1.33 percent, at 10,287.86.
The Standard & Poor's 500 Index <.SPX> fell 18.88 points, or
1.70 percent, at 1,090.92. The Nasdaq Composite Index <>
dropped 42.61 points, or 1.94 percent, at 2,150.53.
Energy stocks <.GSPE> fell 2.5 percent as oil prices fell
on concerns of falling demand and as the dollar strengthened
.
U.S. light sweet crude oil <CLc1> fell $2.25, or 2.83
percent, to $77.33 per barrel.
European shares declined for the third straight session to
a one-week low, with food producers among losers after Danone
<DANO.PA> cut its sales growth target. Financial shares also
depressed indexes, with HSBC <HSBA.L>, Credit Suisse <CSGN.VX>
and Deutsche Bank <DBKGn.DE> off 1.3 percent to 2.5 percent.
A senior economic advisor to the German government reinforced concerns about global growth when he told Reuters
Television that Germany could face a double-dip recession in
late 2010 or 2011 as extra public spending is withdrawn.
The pan-European FTSEurofirst 300 <> index of top
shares fell 1.6 percent.
Japan's benchmark Nikkei share average <> fell 1.3
percent to a four-month closing low after Mitsubishi UFJ
Financial Group <8306.T> said it would raise $11 billion to
boost capital.
"Sensibility is returning to the market. It's no longer
looking for the positive side of the news, but rather taking a
step back and being a bit more critical," said Heinz-Gerd
Sonnenschein, an equity strategist at Postbank in Bonn.
Some emerging market currencies fell as investors worried
about the introduction of capital controls to stem speculative
flows, following a new move by Brazil.
Brazil took another step on Wednesday to try to contain the
appreciation of its currency, the real <BRBY>, unveiling a 1.5
percent tax on certain trades involving American Depositary
Receipts issued by Brazilian companies. For more see
[].
The relative strength of the dollar knocked gold below its
record of $1,150 an ounce, reached on Wednesday. Spot gold
<XAU=> fell $2.80, or 0.24 percent, to $1,141.40.
Weakness in equities fueled a bid for U.S. government debt,
outweighing concern over the $118 billion in new Treasury bonds
dealers must sell next week. Bonds were also supported as a
report of U.S. jobless claims underscored the American labor
market is still soft. []
Yields on benchmark 10-year Treasury notes <US10YT=RR> fell
0.04 percentage point to 3.33 percent, matching a more than
one-month low hit on Tuesday.
(Additional reporting by Wanfeng Zhou in New York, Jeremy
Gaunt in London and Christoph Steitz in Frankfurt; Editing by
James Dalgleish)
