* Major U.S. stock indexes drop more than 1.5 percent
* Dollar weakens broadly, 7-month low against Swiss franc
* Gold at highest since July 1, oil below $75 on data
(Recasts lead; updates with European markets' close)
By Jennifer Ablan
NEW YORK, Aug 19 (Reuters) - Fear gripped world markets on
Thursday, pummeling stocks and driving the dollar to a near
15-year low against the yen as the latest economic data spurred
new worries of a deepening slowdown in the United States that
could reverberate around the world.
Investors fled for the safety of U.S. Treasuries and gold,
sending the yield on the 30-year Treasury bond to its lowest
level since April 2009 and driving gold to a seven-week high in
New York.
New U.S. claims for first-time jobless benefits scaled a
nine-month high last week, while the Federal Reserve Bank of
Philadelphia reported an unexpected contraction in
manufacturing in the Mid-Atlantic region.
"The U.S. macroeconomic numbers once again increased doubts
regarding the strengths of the U.S. economy in the second half
and raised concerns that the economy might be weakening more
than previously anticipated," said Tammo Greetfeld, equity
strategist at UniCredit in Munich.
"Investors ... will increasingly ask themselves how much
scope the U.S. central bank actually does have to successfully
counter an economic downturn, if needed."
Initial U.S. unemployment claims unexpectedly rose by
12,000 to 500,000 in the week ended Aug. 14, marking a third
straight week of gains, the Labor Department reported.
And the contraction reported by the Philadelphia Fed in its
business activity index confounded markets that had been
expecting a rise. []
"We see data like this and it kind of confirms the bottom
end of the scenario and it's going to be pretty tough all over
right now for commodities, equities," said Dan Cook, senior
market analyst at IG Markets in Chicago.
In mid-day New York trade, the Dow Jones industrial average
<> was down 167.94 points, or 1.61 percent, at 10,247.60.
The benchmark Standard & Poor's 500 Index <.SPX> was down 20.05
points, or 1.83 percent, at 1,074.11 and the Nasdaq Composite
Index <> was down 39.00 points, or 1.76 percent, at
2,176.70.
On the other side of the Atlantic, European shares hit a
one-month closing low. The FTSEurofirst 300 <> index of
top European shares fell for a second straight session and
ended down 1.5 percent at 1,036.84 points, the lowest close
since July 21.
The disappointing economic numbers put pressure especially
on financial and commodity shares, with the STOXX Europe
banking index <.SX7P>, the basic resources index <.SXPP> and
the oil and gas index <.SXEP> falling 1.9 to 2 percent.
Overall, the MSCI All-Country World equity index
<.MIWD00000PUS> fell 1.19 percent after hitting its highest in
more than a week earlier on the session.
Latin America stocks were pressured by concerns about
slowing growth in the United States, which is Mexico's top
trading partner and a major influence on the region.
DOLLAR WEAKENS
The dollar was down 0.08 percent at 85.13 yen <JPY=>, off a
session low of 84.90 touched after the Philly Fed factory data,
but still off a 15-year low of 84.72 yen hit on trading
platform EBS last week.
The dollar also fell more than 1 percent versus the Swiss
franc to trade as low as 1.0295 <CHF=>, a level last seen Jan.
19, according to Reuters data.
But the euro <EUR=> was down 0.37 percent at $1.2808 from a
previous session close of $1.2855.
The jobless claims figure "fits in with a gloomier
assessment of the U.S. economy, and the yen has gained a bit on
it," said Brown Brothers Harriman's Thin. "But people are still
questioning whether to sell the dollar on weak U.S. data or buy
it on a general move away from risk."
Benefiting from the renewed flight to safety, U.S.
Treasuries and gold prices rose.
"The Philly Fed report is concerning because it had been
showing the economy was doing okay," said Ira Jersey,
interest-rate strategist at Credit Suisse in New York.
"But now it is showing the new orders and employment
components are in negative territory. That's bad news for the
economy and good news for the Treasuries market."
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
17/32, with the yield at 2.58 percent, and the two-year U.S.
Treasury note <US2YT=RR> was up /32, with the yield at 0.48
percent.
But the 30-year U.S. Treasury bond <US30YT=RR> stole the
spotlight, The yield on the 30-year, which moves inversely to
its price, hit a 16-month low of 3.64 percent, while its price
rose 1-22/32.
In energy and commodities prices, U.S. light sweet crude oil
<CLc1> fell $1.23, or 1.63 percent, to $74.19 per barrel,, and
spot gold prices <XAU=> rose $2.45, or 0.20 percent, to
$1231.00. The Reuters/Jefferies CRB Index <.CRB> was down 1.73
points, or 0.64 percent, at 268.17.
Copper prices <CMCU3> dropped from a two-week high on the
London Metal Exchange to trade at $7,352 a tonne from $7,390 a
tonne at the close on Wednesday, while oil <CLc1> dropped below
$75 per barrel.
(Additional reporting by Emily Flitter and Walter Brandimarte
in New York; Editing by Leslie Adler)
