* Global stocks fall as weak US data spurs recovery fears
* Oil slips 3 pct to under $78 a barrel on economic woes
* U.S. dollar gains as stocks falter after Thursday rally
* Government debt jump as mixed data fuels recovery doubts
(Updates with U.S. markets, changes byline, dateline; previous
LONDON)
By Herbert Lash
NEW YORK, Oct 30 (Reuters) - Global stocks slumped and
crude oil fell on Friday after reports showed U.S. consumers
cut spending in September while sentiment turned lower this
month, fanning skepticism about an economic recovery.
The U.S. dollar rebounded after steep losses on Thursday,
when data that showed the U.S. economy grew in the third
quarter fueled a global stock rally that helped gains on Friday
in Asia. For details, see: []
But Friday's data gave a mixed picture as factory activity
in the U.S. Midwest expanded for the first time in more than a
year. The result was a renewed safety bid that helped lift
government debt prices on both sides of the Atlantic.
[][]
Gold prices slipped below $1,040 per ounce in Europe before
paring losses as the dollar extended gains against a basket of
currencies, while oil prices fell 3 percent to below $78 a
barrel as the bearish data dented investors' confidence.
[][]
"There is some weakness after Thursday's exuberance over
GDP data in light of today's report on the stressed consumer,"
said John Kilduff, co-chief investment officer and partner at
hedge fund Round Earth Capital.
Major U.S. and European stock indexes slipped more than 2
percent on the day and racked up declines for October.
The pan-European FTSEurofirst 300 <> index of top
shares posted its biggest monthly decline in eight months, and
the Nasdaq <> was headed to its first month of declines in
eight. U.S. stocks had gained almost 60 percent from March
lows.
"The market's had a huge run-up, and hedge funds and money
managers are coming into crunch time," said Tom Alexander, head
of Alexander Trading in Savannah, Georgia.
"Those that had these huge gains may have a finger on the
trigger, locking in some of those gains."
At 1 p.m., the Dow Jones industrial average <> was down
235.04 points, or 2.36 percent, at 9,727.54. The Standard &
Poor's 500 Index <.SPX> was down 27.64 points, or 2.59 percent,
at 1,038.47. The Nasdaq Composite Index <> was down 48.36
points, or 2.31 percent, at 2,049.19.
The FTSEurofirst 300 provisionally closed down 2.3 percent
at 974.45 points.
Bund futures rose to their highest level in one-and-a-half
weeks as the steep equity declines helped bolster demand for
lower-risk government debt. []
Bond prices had been up all session supported by month-end
related buying.
U.S. government debt also rose.
With the economy still fragile a year after the global
credit crisis, the Federal Reserve will likely stick to its
ultra-easy policy and near-zero interest rate target after
policymakers convene next week, analysts said.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
23/32 in price to yield 3.4071 percent.
Positive manufacturing data from the Midwest failed to dent
dollar buying and traders said this may be partially due to
month-end flows into the U.S. currency related to foreign
portfolios.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.57 percent at 76.35.
The euro <EUR=> was down 0.71 percent at $1.4726. Against
the yen, the dollar <JPY=> was down 1.16 percent at 90.35.
U.S. crude for December delivery <CLc1> fell $2.37 to
$77.50 a barrel. London Brent crude <LCOc1> slipped $2.25 to
$75.79.
Spot gold prices <XAU=> fell $5.60 to $1,039.35 an ounce
against $1,044.95 late in New York on Thursday.
Asian stocks bounced back from their worst drop in two
months. The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> rose 2 percent, but later pared gains, up about
0.9 percent. The Nikkei <> in Tokyo climbed 1.4 percent.
(Reporting by Rodrigo Campos, Gertrude Chavez-Dreyfuss, Edward
McAllister and Richard Leong in New York, Ian Chua and Joanne
Frearson in London; writing by Herbert Lash; Editing by Kenneth
Barry)
