* U.S. GDP, weekly jobless claims disappoint investors
* Bonds rally as GDP, jobless data fall short of forecast
* Stocks mostly fall on economic data, Nasdaq is higher
* Oil retreats, pressured by bearish U.S. economic data
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, July 31 (Reuters) - Global stocks and the dollar
slid as investors shifted funds to safer government debt on
Thursday after disappointing data on U.S. jobs and economic
growth revived worries about the health of America's economy.
Oil fell 2 percent as the surprise jump in U.S. weekly
jobless claims and weaker than expected second-quarter gross
domestic product pressured crude prices.
U.S. stocks accelerated their decline late in the session,
pulling down the Nasdaq, which had traded higher for most of
the day after Bristol-Myers Squibb Co <BMY.N> offered to buy
out biotech partner ImClone Systems Inc <IMCL.O> at a premium.
Investors were concerned that it took the help of massive
government rebate checks to keep the U.S. economy growing even
at a modest 1.9 percent in the second quarter. The surprisingly
weak gain was not enough to dispel Wall Street fears of rising
recession risks.
The markets were particularly unsettled over revised data
from the Commerce Department that showed U.S. output shrank in
last year's final quarter. It only advanced slightly then at
the start of 2008.
"Investors are on edge," said Alan Lancz, president of Alan
B. Lancz & Associates Inc., an investment advisory firm, based
in Toledo, Ohio. "This morning's economic numbers were
disappointing. Unemployment is a concern. The economy is still
growing but it's definitely slow growth."
Further undermining confidence, the U.S. Labor Department
said jobless claims surged to 448,000 last week from a revised
404,000 in the prior week. Readings that are above 400,000 in
the past have proven to be a sign that a recession is on hand,
especially if that rate of jobless claims is sustained.
Investors pummeled shares of big manufacturers, including
Caterpillar, which fell 3.5 percent and Boeing, down 4.3
percent.
"The trend is definitely negative for the labor market,"
said Steve Point, lead portfolio manager at Glenmede Investment
Management in Philadelphia. "This could have a great impact on
consumer spending."
However, business activity data from Chicago NAPM, the
Institute for Supply Management-Milwaukee, and Kansas City
Federal Reserve showed surprising regional growth in July.
Energy shares weighed on the Dow after Exxon Mobil's
<XOM.N> quarterly earnings missed forecasts and the price of
oil fell. Exxon Mobil's shares slid 4.9 percent to $80.43.
The Dow Jones industrial average <> was down 205.67
points, or 1.78 percent, at 11,378.02. The Standard & Poor's
500 Index <.SPX> was down 16.87 points, or 1.31 percent, at
1,267.39. The Nasdaq Composite Index <> was down 4.17
points, or 0.18 percent, at 2,325.55.
On the month, the Dow was up 0.3 percent, while the Nasdaq
finished July up 1.4 percent. The S&P was down 1 percent in
July.
European shares closed flat in a volatile session following
the U.S. economic data and a flurry of mixed earnings results
in Europe.
The FTSEurofirst 300 index <.FETU3> of top European shares
closed 0.1 percent lower at 1,180.04 points.
British lender HBOS <HBOS.L> surprising investors with
better-than-expected first-half results.
But food producers were the biggest drag after Unilever
<ULVR.L> delivered second-quarter earnings which some analysts
described as "poor quality."
The stock plummeted 8.1 percent in London, dragging peers
Danone <DANO.PA> and Nestle <NESN.VX>, which fell 2.2 percent
and 0.9 percent, respectively.
U.S. and euro zone government bonds rose, buoyed by the
U.S. economic data showing a slower pace of growth while euro
zone inflation data hit a new record high, was no worse than
expected.
The benchmark 10-year Treasury note's <US10YT=RR> price,
which moves inversely to its yield, was up 26/32 for a yield of
3.95 percent, the lowest in almost two weeks and down from 4.05
percent late on Wednesday.
The euro surged to a session high of $1.5700, according
to Reuters data, adding to overnight gains sparked by a jump
in euro zone inflation to a record high in July. It last traded
at $1.5598 <EUR=>, up 0.1 percent on the day.
The dollar slid 0.2 percent against the yen to 107.85 yen
<JPY=> after falling as low as 107.58 yen.
Oil prices fell on the signs of economic weakness.
"Declining levels of demand are still in the forefront of
the market," said Gene McGillian, analyst at Tradition Energy.
U.S. crude <CLc1> traded down $2.69 to settle at $124.08 a
barrel, erasing most of Wednesday's $4.58 jump. London Brent
crude <LCOc1> gave up $3.13 to $123.98 a barrel.
Gold ended higher as the dollar slipped on the jobs data,
but oil weakness crimped bullion's gains.
Gold <XAU=> last traded at $913.45/914.65 in New York.
Most Asian stock markets rose after a move by central banks
to boost liquidity in financial markets offset a $4 rebound in
oil prices,
Tokyo's Nikkei average <> edged up 0.1 percent, and
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> up 0.5 percent.
(Reporting by Walter Brandimarte, Lucia Mutikani and Richard
Leong in New York and Kirsten Donovan, Patrizia Kokot, Jan
Harvey and Jane Merriman in London)
(Reporting by Herbert Lash. Editing by Richard Satran)
