* MSCI world equity index down 0.5 percent at 291.53
* Euro falls broadly on Europe banking concerns
* Government bonds firmer; oil tumbles
By Natsuko Waki
LONDON, Sept 7 (Reuters) - World stocks pulled back from a
one-month high on Tuesday while the euro tumbled as renewed
concerns about Europe's banking sector and growth encouraged
investors to pause after a recent rally.
German manufacturing orders unexpectedly fell in July at
their steepest rate in more than a year, weighed down by weaker
demand from abroad and a below-average volume of big orders.
Investors were also spooked by a Wall Street Journal report
that said it believed "stress tests" published more than a month
ago underestimated some lenders' holdings of potentially risky
government debt.
That helped rekindle concerns about the vulnerability of the
sector after Germany's banking association said on Monday the
country's 10 biggest banks may need 105 billion euros of
additional capital. []
"The (WSJ article) is obviously undermining banks and
dragging everything down with it," David Morrison, market
strategist at GFT Global said.
"Last week was an incredible start to September. There were
strong moves up on the back of economic numbers out of the
States in particular, but... I think there is a growing feeling
that as that data is being dissected, it really did not justify
the move up that we saw in equities in the big indices."
The MSCI world equity index <.MIWD00000PUS> fell 0.5
percent, while the Thomson Reuters global stock index
<.TRXFLDGLPU> lost around half a percent.
The FTSEurofirst 300 index <> dropped half a percent,
led by banking shares <.SX7P> such as Societe Generale
<SOGN.PA>.
Emerging stocks <.MSCIEF> also lost half a percent and U.S.
futures fell 0.6 percent <SPc1>, pointing to a weaker start when
Wall Street reopens after the Labor Day holiday.
The euro fell one percent to $1.2750 <EUR=> while it lost
more than 1.3 percent to 106.95 yen <EURJPY=>.
WORRIES RESUFACING
Safe-haven assets were in demand. Bund futures <FGBLc1> rose
71 ticks while the U.S. 30-year Treasury bond gained a full
point in price <US30YT=RR>, driving its yield down 6.5 basis
points to 3.729 percent.
Portugal's 10-year government bond yield spread over German
benchmarks hit its widest since May, with yields <PT10YT=TWEB>
rising 11 basis points to 5.8 percent.
"There is still some doubt about economic growth in the
second half," said Koen De Leus, economist at KBC Securities.
"We have just had a relief rally and investors are waiting
to see what direction the economy is going to take in the second
half."
Elsewhere, the dollar rose 0.6 percent against a basket of
major currencies <.DXY>. U.S. crude oil <CLc1> fell 2.3 percent
to $72.87 a barrel, in part weighed by a strong dollar.
The Bank of Japan held off on loosening monetary policy
further on Tuesday but said it would take timely action when
necessary, setting the stage for possible easing next month when
there is clearer evidence of the strong yen's impact on the
slowing economy. []
However, BOJ Governor Masaaki Shirakawa's comment that
monetary authorities cannot control foreign exchange rates
encouraged some buying in the yen, which rose 0.4 percent 83.85
per dollar to <JPY=>.
(Additional reporting by Tricia Wright; editing by Patrick
Graham)
