* US stock indexes at lowest close in more than month
* Dollar weakens broadly, 7-month low against Swiss franc
* Gold at highest since July 1; oil below $75
* US jobless claims, factory data sparks fears on economy
(Updates with U.S. 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."
The president of the St. Louis Federal Reserve Bank, James
Bullard, said the U.S. central bank may need to enlarge its
bond purchases if the economic recovery slows further.
[]
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. []
"The risk of double-dip has increased," said Jim Baird,
chief investment strategist at Plante Moran Financial Advisors
in Kalamazoo, Michigan. "Investors are trimming their exposure
to risky assets."
The Dow Jones industrial average <> was down 144.33
points, or 1.39 percent, at 10,271.21. The benchmark Standard &
Poor's 500 Index <.SPX> was down 18.53 points, or 1.69 percent,
at 1,075.63. The Nasdaq Composite Index <> was down 36.75
points, or 1.66 percent, at 2,178.95.
The selloff was broad, with five stocks falling for every
one rising on the New York Stock Exchange. Sectors most
sensitive to growth were hit hardest. Manufacturers 3M <MMM.N>,
United Technologies <UTX.N>, and Boeing <BA.N> were the biggest
drags on the Dow.
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.
Overall, the MSCI All-Country World equity index
<.MIWD00000PUS> fell 1.1 percent after hitting its highest in
more than a week earlier in 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 0.1 percent at 85.33 yen <JPY=>, off a
session low of 84.89 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.
The euro <EUR=> was down 0.29 percent at $1.2818 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."
Long-dated debt led the rally, with the yield on 30-year
bond <US30YT=RR> hitting a 16-month low of 3.622 percent and
the 10-year note yield <US10YT=RR> posting a 17-month low at
2.557 percent. The two-year yield <US2YT=RR> touched an
all-time low of 0.475 percent.
In energy and commodities prices, U.S. light sweet crude oil
<CLc1> fell 99 cents, or 1.31 percent, to settle at $74.43 per
barrel, and spot gold prices <XAU=> rose $2.30, or 0.19
percent, to $1,230.80. The Reuters/Jefferies CRB Index <.CRB>
was down 1.68 points, or 0.62 percent, at 268.22.
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)
