* Gold, silver dive as dollar surges
* US stocks fall, pressured by banks, metal companies
* Euro-zone debt worries hang over currency market
(Updates with activity in silver)
By Manuela Badawy
NEW YORK, Nov 9 (Reuters) - Investors pulled away from
speculative bets late on Tuesday, roiling U.S. stock and
commodities markets and pushing the dollar higher.
Silver reversed from a 30-year high in record trading
volume, falling by 3 percent, while gold's rise to a fourth
consecutive record level unraveled, dropping by 1.14 percent.
U.S. government debt prices also dropped as investors were
uncertain about demand for Wednesday's $16 billion auction of
30-year bonds.
"The markets in general are severely overbought and
something has to give," Troy Buckner, managing principal of
hedge fund NuWave Investment Management LLC of Morristown, New
Jersey.
Investors questioned the potential outcome in various asset
classes of the Federal Reserve's plan to stimulate growth by
way of printing more money to buy $600 billion in U.S. bonds.
Heavily indebted countries such as Ireland, Portugal and
Spain were also back on investors' radar on Tuesday: The cost
of protecting their government debt against default rising
substantially in the past week.
The renewed concerns weighed on the euro <EUR=>, which hit
its lowest in nearly two weeks versus the dollar. It was last
trading down 1.07 percent at $1.3772.
The dollar was up against a basket of currencies, with the
U.S. Dollar Index <.DXY> rising almost 1 percent at 77.743.
Against the Japanese yen, the dollar <JPY=> rose 1 percent at
81.98.
U.S. equities fell, led by sharp losses in bank and
precious metal stocks.
An index of gold and silver miners' shares <.XAU> fell 2.6
percent after hitting an all-time high earlier in the day.
Indeed, the U.S. silver futures market burst into the
spotlight of global financial markets on Tuesday, after a 30
percent increase in margins and record trading volume
contributed to an abrupt midday decline in stocks and a slide
in commodities.
Amid a growing public debate about the level of speculation
in the niche market, a much smaller but more volatile proxy for
bullion, dealers said silver experienced accelerating long
liquidation starting around 1:30 p.m., causing prices to dive
after having touched a 30-year high earlier in the session.
While traders said a correction was overdue in a market
that surged by as much as 20 percent over the past five days,
far outpacing gold's 6.5 percent rise, few anticipated the
knock-on effect it seemed to have on other financial markets.
"The selloff started because the market had gone too far
too fast," said Frank McGhee, head precious metals trader with
Integrated Brokerage Services LLC in Chicago.
DOW DOWN ANOTHER DAY
The Dow Jones industrial average <> was down 60.09
points, or 0.53 percent, at 11,346.75. The Standard & Poor's
500 Index <.SPX> was down 9.85 points, or 0.81 percent, at
1,213.40. The Nasdaq Composite Index <> was down 17.07
points, or 0.66 percent, at 2,562.98.
The December futures contract for the Nikkei 225 stock
index <0#NK:> trading in Chicago rose 20 points to 9,745.
European shares <> shrugged off euro zone debt
concerns to close at their highest level in more than two years
with the pan-European FTSEurofirst 300 <> index of top
shares up 0.6 percent at 1,117.46 points, its highest close
since September 2008.
The MSCI all-country world equity index <.MIWD00000PUS>
eased 0.17 percent. Emerging market stocks <.MSCIEF> were up
0.04 percent.
U.S. Treasury debt prices fell after an auction of the
benchmark notes and ahead of the sale of 30-year bonds on
Wednesday.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 29/32, with the yield at 2.6613 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 3/32, with the yield at
0.4427 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 2-1/32 in price, with the yield at 4.2505 percent.
"Bonds are selling off due to both inflationary fears
(commodity market bubbles), the idea that maybe the Fed won't
buy as many bonds, and due to the euro sovereign debt issues
resurfacing," Buckner at NuWave Investment Management said.
Spot gold prices <XAU=> fell $16.05, or 1.14 percent, to
$1,393.00 from an all-time high touched earlier at $1,420.90 an
ounce, while silver <XAG=> fell 3 percent to $26.80 after
touching a 30-year high of $29.33 an ounce.
U.S. crude oil <CLc1> fell 34 cents, or 0.39 percent, to
$86.40 per barrel, after touching $87.63, its highest since
October 2008.
(Additional reporting by Herb Lash; Editing by Kenneth Barry
and Andrew Hay)
