* Wall Street falls but not as bad as feared
* Index of global stocks tumbles to 5-year low
* European stocks down 5 pct, Japan down 9.6 pct
* Dollar and yen soar in risk flight, talk of intervention
* Oil falls to $62.65 per barrel despite OPEC output cut
(Updates with midday U.S. trade)
By Burton Frierson
NEW YORK, Oct 24 (Reuters) - U.S. stocks tumbled and
European shares had their lowest close in five and a half years
on Friday, continuing a global collapse in equities as
investors fearing a long and deep worldwide recession cashed
out of risky assets.
Rates on major currencies gyrated wildly amid the frenzied
stocks rout, sending the dollar and yen to multi-year highs
against the euro and sterling as investors brought investments
home in search of shelter.
Sterling suffered its biggest one-day drop against the
dollar since September 1992 following news that Britain's
economy contracted in the third quarter for the first time in
16 years.
Data also showed the euro zone's private sector economy
shrunk this month at its fastest pace since the monetary
union.
Oil tumbled as far as $62.65 a barrel <CLc1> on
expectations the economic downturn would sap fuel demand,
taking the steam out of an OPEC agreement to cut output. Gold
also fell, while U.S. government bonds rose as investors piled
into this traditional safe haven.
"This has become much more global than it was two weeks
ago. No one or no market is immune," said Robert Macintosh,
chief economist at Eaton Vance Corp in Boston.
"People are running to safety," he said. "It is interesting
how the dollar has been bashed for years and that is the
currency that everybody wants to own."
Bellwether IBM Inc <IBM.N> was a drag on the Dow, but
trimmed losses to stand just 2 percent lower after a fall of
about 5 percent earlier.
Energy companies also tumbled, dragged down by the more
than $3 drop in the price of oil.
The Dow Jones industrial average <> was down 274.78
points, or 3.16 percent, at 8,416.47. The Standard & Poor's 500
Index <.SPX> was down 29.09 points, or 3.20 percent, at 879.02.
The Nasdaq Composite Index <> was down 35.75 points, or
2.23 percent, at 1,568.16.
Still, the U.S. losses did not quite live up to investors'
worst fears.
News that existing-home sales in the United States rose 5.5
percent last month -- the biggest gain since July 2003 --
helped put a floor under sentiment since the housing market has
been at the center of the economic troubles.
The Dow Jones home builders index <.DJUSHB> was up 2
percent, and Pulte Homes Inc. <PHM.N> was the top gainer on the
S&P 500, up 9.3 percent.
The recent turmoil, however, has lowered the bar for a
"good day" on Wall Street.
"I would say today, if we can close the day with the market
down say 3 percent or less, we will have had a very good day,"
said Peter Jankovskis, a chief investment officer at Oakbrook
Investments LLC in Lisle, Illinois.
World stocks, measured by MSCI's all-country world index
<.MIWD00000PUS>, were down 4.63 percent but had trimmed their
losses after hitting five-year lows during the session.
Investors dumped emerging market stocks with particular vigor,
pushing them down 7.42 percent <.MSCIEF>.
European shares had their lowest close since mid-2003, with
the FTSEurofirst 300 <> index of top European shares
closing down 4.93 percent at 829.73 points.
"I sense we've moved beyond the credit crisis. There's a
recognition of the damage inflicted on the global economy, that
is the recession, by the credit crisis," said Mike Lenhoff,
strategist at Brewin Dolphin.
"It's not just limited to the developed world. You can run
but you can't hide anywhere."
Losses in Europe were led by banks, with HSBC <HSBA.L>
slumping 13.5 percent on growing fears of a slowdown in
emerging markets.
Japan's Nikkei <> tumbled almost 10 percent by the
close of trading in Tokyo.
ROCK-SOLID, ROCK-BOTTOM
Japan's huge external surpluses and already rock-bottom
interest rates led the yen to outperform, with the dollar/yen
<JPY=> exchange rate losing about 7 percent at one point to a
13-year low of 90.90 yen.
The disorderly nature of the moves fueled speculation about
Group of Seven central bank intervention to stabilize markets.
"The scale of the recent currency moves will most likely
rekindle intervention talks," said Audrey Childe-Freeman,
currency strategist at Brown Brothers Harriman in London. "The
question here is: have recent moves been excessive? The answer
is yes."
However, the dollar, the victim in markets in recent years,
continued to benefit against other currencies from investors
repatriating savings back to the U.S.
The dollar was up against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> up 1.53 percent
at 86.075 from a previous session close of 84.775.
The euro <EUR=> was down 2.30 percent at $1.2682 from a
previous session close of $1.2980. Against the Japanese yen,
the dollar <JPY=> was down 3.67 percent at 94.24 from a
previous session close of 97.830.
As is often the case, government bonds were big
beneficiaries of the stocks sell-off, but pared their gains
after the worst of the stocks rout passed.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
12/32, with the yield at 3.6386 percent. Euro zone government
bond futures also rallied <FGBLc1>.
(Additional Reporting by Chris Reese; Editing by Leslie
Adler)
