* European banking shares tumble after Goldman downgrade
* Oil eases nearly 1 pct as Iran responds to nuclear offer
* MSCI world index down 0.4 percent at 345.47
* Euro trades flat on less hawkish ECB
(Adds European markets close, changes byline, changes
dateline, previous LONDON)
By Elzio Barreto
SAO PAULO, July 4 (Reuters) - World stocks edged lower on
Friday, getting no relief from a decline in crude prices as
concerns of further banking write-downs weighed on financial
shares.
Oil prices fell more than a dollar a barrel after Iran
responded to an incentives package offered by six world powers
in a bid to resolve a dispute over its nuclear development
program.
But the decline in crude prices was not enough to give
markets a boost, with European shares slumping after Goldman
Sachs said banks may need to raise 60-90 billion euros in
total. The broker lowered 2008-09 estimates for than 40 banks
and said the sector would be hampered by the risk of additional
capital raisings.
"It has become almost 'politically incorrect' to have
banking stocks in a portfolio," said Alain Bokobza, head of
strategy at Societe Generale in Paris.
The euro hit a one-week low against the U.S. dollar but
gave up losses after European Central Bank President
Jean-Claude Trichet said he had no bias on monetary policy,
dousing speculation about aggressive rate hikes this year. The
ECB raised rates a quarter percentage point on Thursday.
Gold was steady in light trading with New York markets
closed for the U.S. Independence Day holiday. But copper, zinc
and other metals fell as worries about supply disruptions in
Peru, where union support for a nationwide mining strike was
collapsing.
Trading in Latin American stocks was slower than usual
because of the U.S. holiday, with markets in Chile and Mexico
posting modest gains and Brazil's bourse edging lower.
"The market is going to trade sideways with the closing
there (in the United States)," said Junior Hydalgo, director of
Trust Investimentos in Sao Paulo.
The FTSEurofirst 300 index <> dropped 1.3 percent
while the MSCI main world equity index <.MIWD00000PUS> fell 0.4
percent, having hit its lowest intraday level since January on
Thursday.
In Brazil, the benchmark Bovespa index <> fell 0.3
percent, while Mexico's <> IPC index firmed 0.02 percent
and Chile's IPSA index <> was up 0.1 percent.
EMERGING FALLOUT
Emerging sovereign spreads <11EMJ> tightened 2 basis points
while emerging stocks <.MSCIEF> fell 0.4 percent.
Analysts say emerging markets, especially in Asia, will be
more severely hit by the rising energy costs.
"The monumental energy price increases will be a
'game-changer' for Asia, in our view," said Stephen Jen, head
of global currency research at Morgan Stanley.
"While there is some scope for remedial policy action to
'amortise' this shock, Asia ex-Japan currencies will likely
weaken against the dollar and assets should underperform in the
period ahead," Jen said.
The euro <EUR=> was flat at $1.5690 after dropping to a
one-week low of $1.5654.
"We're in the camp that thinks there won't be any further
rate hikes from the ECB this year, so we think we've seen the
high of euro/dollar," said Niels Christensen, FX strategist at
Nordea in Copenhagen.
U.S. light crude <CLc1> fell nearly 0.9 percent to $144.01
a barrel, although investors are bracing for a rise to $150 in
the coming sessions.
Gold <XAU=> was little changed at $932.10/933.10 an ounce.
Asian stocks eased, with shares in Japan falling for a 12th
straight session and extending their longest losing streak in a
half century on heightened fears that record high oil and
stagflation will slam company earnings and consumer spending.
The pan-Asia MSCI index <.MIAS00000PUS> fell 0.2 percent,
and Japan's Nikkei share index <> lost 0.2 percent, for
the longest period of daily declines since 1954.
The MSCI index of Asia-Pacific shares <.MSCIAPJ> traded
outside of Japan firmed 0.36 percent, as stocks in Australia
and Hong Kong bucked the gloomy trend in Tokyo.
(Additional reporting by Natsuko Waki, Sitaraman Shankar and
Rodolfo Barbosa; Editing by Jonathan Oatis)
