* Global stocks fall on poor U.S, euro zone economic data
* Bond prices gain as stock sell-off revives safety bid
* US dollar climbs after Russia backs reserve currency
role
* Oil, gold other commodities fall on dollar's strength
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, June 15 (Reuters) - Global stocks fell sharply on
Monday after weak U.S. manufacturing data and record job losses
in Europe raised concerns about the world's economic health
while boosting the safe-haven appeal of U.S. and euro zone
debt.
The U.S. dollar gained broadly after Russia expressed
confidence in the greenback as the world's reserve currency,
and the euro extended losses after the European Central Bank
said euro zone banks face another $283 billion in write-downs.
Crude oil fell more than 3.0 percent to below $70 a barrel
in a further retreat from a near eight-month high. Nickel, zinc
and lead prices tumbled more than 6.0 percent, while copper
also slid after the manufacturing data signaled demand remains
weak.
Gold slipped towards $930 an ounce, pressured by the firmer
dollar while easing crude prices dampened bullion's appeal as a
hedge against the potential of oil-induced inflation.
Gains in the dollar, which makes oil and other dollar-based
commodities more expensive for holders of other currencies,
helped pressure prices. []
U.S. stocks sold off broadly on a reading from the New York
Federal Reserve's "Empire State" general business conditions
index, which fell to minus 9.41 in June from minus 4.55 in May.
[]
"We've got a little bit of cold water thrown on the
manufacturing sector's recovery after seeing some persistent
improvements. We're now back down a little bit," said Eric
Lascelles, chief economics and rates strategist at TD
Securities in Toronto.
At 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was down 194.46 points, or 2.21 percent, at 8,604.80.
The Standard & Poor's 500 Index <.SPX> was down 22.67 points,
or 2.40 percent, at 923.54. The Nasdaq Composite Index <>
was down 46.98 points, or 2.53 percent, at 1,811.82.
Sliding commodity prices hit shares of natural resource
companies on both sides of the Atlantic.
European shares fell, with financials the main drag after
the ECB write-down estimate was published in its latest
Financial Stability Review. See: []
The pan-European FTSEurofirst 300 <> index of top
shares closed 2.5 percent lower at 863.34 points.
"Companies are still not seeing a recovery in a demand,"
said Heino Ruland, strategist at Ruland Research.
"It is a transition from a strong rally which we have seen
since March to a consolidation or fall back to more appropriate
levels as markets went too fast too far," Ruland said.
The 16-country euro zone lost a record 1.22 million jobs in
the first quarter of 2009, data showed, highlighting the depth
of recession and boding ill for any quick turnaround.
[]
U.S. Treasury and euro zone government debt prices rose on
a revived safety bid for bonds. Investors also bet that
monetary authorities will keep interest rates low despite some
signs the recession is easing.
Benchmark U.S. yields retreated from their eight-month high
set last week with anxiety easing about the government's heavy
debt issuance to pay for bailouts and economic stimulus after
auctions last week attracted good demand.
"People are looking at Treasuries with a more attractive
stand. Yields are high enough, which is more appropriate given
the supply," said William Bellamy, director of fixed income
with Thompson, Siegel & Walmsley in Richmond, Virginia.
Bond yields have spiked since March on evidence of economic
stabilization, but their rise has lost momentum on a lack of
consensus on how quickly a recovery will emerge.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
19/32 in price to yield 3.72 percent. The 2-year U.S. Treasury
note <US2YT=RR> gained 2/32 in price to yield 1.24 percent.
Speaking on the sidelines of a Group of Eight finance
ministers in Italy, Russia's Alexei Kudrin said the dollar's
role as the world's main reserve currency is unlikely to change
in the near future. []
Kudrin's remarks alleviated concerns that major emerging
market countries may be diversifying their reserves away from
the dollar ahead of a summit of leaders of Brazil, Russia,
India and China in Russia on Tuesday.
"We saw a lot of dollar-supportive comments from the G8
finance ministers' meeting, starting with Kudrin," said
Sebastien Galy, currency strategist at BNP Paribas in New
York.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 1.49 percent at 81.324.
The euro <EUR=> was down 1.88 percent at $1.3757. Against
the yen, the dollar <JPY=> was down 0.56 percent at 97.85.
U.S. light sweet crude oil <CLc1> fell $2.18 to $69.86 a
barrel.
Spot gold prices <XAU=> fell $11.50 to $926.40 an ounce.
Asian shares fell as investors fretted over whether the
global economy had improved enough to justify higher prices.
MSCI's index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 1.8 percent to 327.01 while Japan's Nikkei
share average <> shed 1 percent at 10,039.67 after closing
above 10,000 on Friday for the first time in eight months.
(Reporting by Edward Krudy, Gertrude Chavez-Dreyfuss and
Richard Leong in New York; Emelia Sithole-Matarise, Edward
McAllister, Kylie MacLellan and Joanne Frearson in London;
writing by Herbert Lash)
