* Weak US jobs data, Hungary debt spark fresh selling
* Euro drops to lowest in over 4 yrs as investors shun risk
* Asian stock markets slump over 3 percent, oil under $70
* U.S. dollar rallies, further pressuring commodities
By Koh Gui Qing
SYDNEY, June 7 (Reuters) - The euro sank to four-year lows
on Monday and stocks and commodities fell as increasing market
volatility prompted investors to shed even more risky bets.
Disappointing U.S. jobs data on Friday and fears that euro
zone debt problems were worsening spurred already nervous
investors to face up to the risk the recovery of the world
economy is faltering, although few see a recession as likely.
The sell-off looked set to persist in Europe, with
financial spreadbetters expecting Britain's FTSE 100 <.FTSE
100>, Germany's DAX <> and France's CAC-40 to open
between 1.3-2.2 percent lower.
"There's a real sense of investors taking their money out
of risky assets," said Nagayuki Yamagishi, a strategist at
Mitsubishi UFJ Morgan Stanley Securities.
"The euro zone worries seem set to be with us for a while."
The euro <EUR=>, which has turned into the barometer for
investor risk appetite in recent weeks after Greece's debt
crisis, fell below $1.1900 to its lowest in more than four
years at one point.
Comments from Hungary's government on Friday that it might
suffer a Greece-style debt crisis continued to cast a pall over
the market, giving investors a reason to sell the euro.
[]
Analysts said the controversial remarks from Hungary were
politically motivated and belied Hungary's economic
fundamentals, which were far better than Greece's, but
investors paid no heed.
Against the yen, the euro <EURJPY=> skidded below 108.33
yen to an eight-year trough.
A stronger yen punished Japanese stocks, with exporters
particularly hard hit.
Japan's Nikkei index <> had its worst day in 14
months, falling 3.8 percent. The MSCI index for Asian stocks
outside Japan <.MIAPJ0000PUS> also shed 3.8 percent.
S&P futures <SPc1> fell 0.8 percent, pointing to further
losses in U.S. stocks later in the day, having already fallen
on Friday to their lowest since February []
The Australian dollar <AUD=D4> and the South Korean won,
both of which are extremely vulnerable to turns in demand for
risk, also suffered.
The Australian dollar struggled at $0.8136. The won
<KRW=KFTC> fell to as far as a two-week low of 1,237.4/8.6 per
dollar.
Assets with safe-haven appeal benefited from the scramble
out of risk. Investors sought safety in the liquidity of U.S.
Treasuries, with 10-year Treasury yields dropping to 13-month
lows of 3.17 percent. []
Demand for U.S. government debt fuelled demand for the U.S.
dollar. The U.S. dollar index <.DXY> hit a 15-month high of
88.7.
A firmer U.S. dollar, together with the threat to the world
economic recovery, pushed commodity prices lower.
Oil <CLc1> fell 1.6 percent to $70.36 a barrel by 0640 GMT,
and Shanghai copper <SCFc3>, zinc <SZNc3> and aluminium futures
<SAFc3> sank across the board. []
NO RESPITE YET FOR EURO
Friday's U.S. economic data had showed the recovery in the
labour market was not as strong as hoped, with hiring by U.S.
private employers slowing sharply in May.
Although some analysts said cautious hiring by U.S. firms
did not herald another recession in the U.S. economy, the
world's largest, stock investors paid no heed. Major U.S. stock
indexes fell by up to 3.6 percent on Friday.
Some investors were particularly disappointed by the U.S.
jobs data because they had counted on a strong showing to
offset bad news around Europe's sovereign debt problems.
World leaders at a G20 meeting over the weekend appeared to
acknowledge investor fears about Europe's debt woes by reaching
an uneasy compromise on cuts in government budgets. But the
outcome had little impact on markets on Monday, however.
The euro's drop on Monday was caused in part by some
stop-loss selling around $1.1950. Traders said more aggressive
stop-loss selling may be had if the euro falls under $1.1850.
After that, some analysts said the common currency could
fall all the way to $1.15.
"There might be a bit of support around the $1.18 handle,
but we expect it to fall to $1.15 eventually," Jonathan
Cavenagh, a currency strategist at Westpac said of the
struggling euro.
"It's difficult to see a light at the end of tunnel for it
just yet."
(Reporting by Koh Gui Qing; Editing by Clarence Fernandez)
