* Major U.S. stock indexes weaken, Europe stocks drop
* Euro falls broadly on Europe's banking concerns
* Safe-haven trade pushes yen to 15-year high vs USD
* Government bonds firmer; oil price falls
(Updates with midday New York markets, dateline, byline)
By Walter Brandimarte and Daniel Bases
NEW YORK, Sept 7 (Reuters) - World stocks pulled back from
a one-month high on Tuesday, the euro tumbled and the yen hit a
15-year high on renewed concerns about the European banking
sector and signs of slowing growth in the euro zone.
Oil prices fell as the end of the U.S. holiday driving
season added to the economic concerns. Gold prices rose as a
result of investors seeking shelter from global economic
concerns.
U.S. Treasury prices rebounded after three session of
losses as investors sought safety. Many also had second
thoughts about the positive market impact of the U.S. payrolls
report on Friday.
Souring investor sentiment was data showing German
manufacturing orders unexpectedly fell in July at their
steepest rate in more than a year. For details, see
[].
Investors were also rattled by a Wall Street Journal report
that said "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 Monday the
country's 10 biggest banks may need 105 billion euros of
additional capital.
"There's concern about the health about the European
banking sector ... that fear kind of comes and goes," said Tom
Schrader, managing director, U.S. equity trading at Stifel
Nicolaus Capital Markets in Baltimore.
The MSCI All-Country World equity index <.MIWD00000PUS>
fell just less than 1 percent, one day after closing at its
highest level in nearly one month.
Major U.S. stock indexes lost ground. Wall Street returned
from a long Labor Day holiday weekend.
The Dow Jones industrial average <> fell 77.42 points,
or 0.74 percent, at 10,370.51. The Standard & Poor's 500 Index
<.SPX> lost 8.96 points, or 0.81 percent, at 1,095.55. The
Nasdaq Composite Index <> dropped 17.44 points, or 0.78
percent, at 2,216.31.
The FTSEurofirst 300 index <> of top European shares
dropped 0.4 percent, with banking and mining shares losing
ground and cutting off a two-week rally.
French bank Societe Generale <SOGN.PA>, fell 3.85 percent.
Mining shares weakened after Australian Prime Minister
Julia Gillard secured a second term in office, vowing to press
ahead with a new mining tax and work towards a scheme that
would force major polluters to pay for their carbon emissions.
The stocks of Xstrata <XTA.L>, BHP Billiton <BLT.L> and Rio
Tinto <.RIO.L> were off 1.2 to 1.4 percent
U.S. crude oil <CLc1> fell $1.20 to $73.40 per barrel.
EURO TUMBLES ON RISK AVERSION
Banking fears knocked down the euro, which weakened 1.21
percent against the dollar to $1.2716.
The yen's safe-haven status pushed it to a 15-year high
against the U.S. dollar.
The dollar was down 0.56 percent against the yen <JPY=>, at
83.71. Against major currencies, however, the greenback was up
0.79 percent, according to the U.S. Dollar index <.DXY>.
Earlier in the trading day, the Bank of Japan Governor
Masaaki Shirakawa said monetary authorities could not control
forex rates, increasing speculation that Japan was not
preparing to act to stem yen strength at the moment.
[]
Shirakawa "has essentially ruled out intervention in the
near term," CitiFXWire analysts said in a client note, adding
that the statement helped to encourage yen bulls.
However, Japanese Finance Minister Yoshihiko Noda on
Tuesday said the government would take firm action on
currencies when needed, saying recent moves were clearly
one-sided. []
Ashraf Laidi, chief market strategist at CMC Markets in
London said the Japanese currency is being bolstered by
expectations that incumbent Prime Minister Naoto Kan will stave
off a leadership challenge by rival Ichiro Ozawa.
[]
U.S. Treasuries benefited from a flight to quality trade.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
16/32 in price, yielding 2.64 percent. The 30-year bond
<US30YT=RR> was up 45/32, yielding 3.70 percent.
Treasuries prices had been under pressure from
stronger-than-expected U.S. economic data last week, including
Friday's jobs numbers.
Spot gold <XAU=> rose 0.6 percent, to $1,257.00 an ounce.
(Additional reporting by Tricia Wright, John Parry and Nick
Olivari; Editing by Andrew Hay)
