* Global stocks fall on weak profit outlook, bank concerns
* U.S., European debt prices rise on sliding stock markets
* Oil prices slip on worries about slower economic growth
* Euro, yen gain on dollar as risk aversion fears ease
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Feb 2 (Reuters) - The euro and the yen rose on
Monday as the appeal of the U.S. dollar as a safe haven eased
after a better-than-expected reading on American manufacturing
data, but bond prices rose on a renewed flight to safety
buying.
U.S. technology shares rose on hopes they might be an early
beneficiary of a stimulus spending bill in Congress.
But weak economic data and uncertainty about the fate of
President Barack Obama's plans to stem bank losses weighed on
most stocks, while data pointing to further economic pain sent
crude oil prices down almost 4.0 percent.
Companies continued to lower their outlooks because of a
worsening economic environment that could be seen in the data.
U.S. consumers cut spending for a sixth straight month in
December and their incomes shrank, while U.S. construction
spending fell for a third straight month in December.
"The economic data is sinking in on everybody," said James
Caron co-head of global rates research at Morgan Stanley in New
York. "It seems as though the government's stimulus plan is
stumbling a little. The clarity of it is not what it once was,"
he said.
The boost from the tech stock sector was limited by
declines in shares of big manufacturers, including 3M Co
<MMM.N>, down nearly 6.0 percent, and Boeing <BA.N>, off 3.6
percent. Among financials, Bank of America Corp <BAC.N> slid
8.8 percent.
Tech standouts included bellwethers Microsoft <MSFT.O>, up
4.3 percent, and Intel Corp <INTC.O>, which gained 5.7
percent.
"Clearly people are trading sector baskets. They are trying
to make bets what industry will recover or get worse," said
Eric Kuby, chief investment officer at NorthStar Investment
Management Corp in Chicago. "Tech is one of those baskets."
The Institute for Supply Management said its index of U.S.
factory activity rose to 35.6 from a nearly three-decade low of
32.9 in December, its first increase since June, in a report
that provided a sign of relief for the battered U.S. economy.
Both the Dow and S&P 500 briefly fell 10 percent for the
year on Monday after the two U.S. benchmarks racked up their
worst January ever. Financials were behind the decline, as they
were in Europe, where the leading index ended sharply lower.
The Dow Jones industrial average <> closed down 64.11
points, or 0.80 percent, at 7,936.75. The Standard & Poor's 500
Index <.SPX> fell 0.45 points, or 0.05 percent, at 825.43. The
Nasdaq Composite Index <> rose 18.01 points, or 1.22
percent, at 1,494.43.
The FTSEurofirst 300 index <> of top European shares
ended down 2.4 percent at 777.28 points.
Banks continued to be the weakest sector in Europe. British
bank Barclays <BARC.L> was a top loser, falling 12.3 percent
after a Moody's downgrade.
French bank BNP Paribas <BNPP.PA> slid 9.4 percent, hit by
its statement that a revised deal to buy assets of stricken
Belgian-Dutch financial group Fortis <FOR.BR> would not boost
its core capital ratio.
The euro and yen rose against the U.S. dollar, which has
rallied in recent months on extreme risk aversion amid the
global economic slowdown.
Sterling sank against the dollar, hurt by deepening worries
over the health of Britain's financial sector and economic
outlook.
The euro <EUR=> rose 0.54 percent at $1.2849, while against
the yen, the dollar <JPY=> fell 0.51 percent at 89.51.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.12 percent at 85.939.
Benchmark 10-year Treasury notes <US10YT=RR> traded 1-5/32
higher in price to yield 2.72 percent, while the two-year note
<US2YT=RR> traded 4/32 higher to yield 0.89 percent.
U.S. light crude for March delivery <CLc1> fell $1.60 to
settle at $40.08 a barrel. London Brent crude <LCOc1> shed
$2.06 to $43.82 a barrel.
Gold slipped as investors took profits after a 15 percent
gain in January, but deepening concerns about the economy and
turbulence in equity markets are expected to trigger potential
gains in bouillon, seen as a store of value.
"Gold is currently working as a 'fear indicator,' signaling
risk aversion of market participants," said Eugen Weinberg,
commodities analyst at Commerzbank in Frankfurt.
U.S. gold futures for April delivery <GCJ9> settled down
$21.20 at $907.20 an ounce in New York.
Japan's Nikkei share average <> fell 1.5 percent,
while stocks in Asia-Pacific outside Japan <.MIAPJ0000PUS> were
down 2.26 percent, according to an MSCI index.
(Reporting by Leah Schnurr, Richard Leong, Vivianne Rodrigues
and Emelia Sithole-Matarise, Sitaraman Shankar, David Sheppard
and Pratima Desai in London; writing by Herbert Lash, Editing
by Chizu Nomiyama)
