* World stocks falls for fifth day on growth fears
* 10-yr U.S. Treasury yields hit 16-month low
* Dollar index falls after rising for five days
By Dominic Lau
LONDON, Aug 16 (Reuters) - World stocks fell for the fifth
day on Monday and U.S. 10-year bond yields hit a 16-month low as
far weaker than expected growth numbers from Japan added to
concerns over a faltering global economic recovery.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> fell 0.2 percent, with Europe's FTSEurofirst 300
<> down 0.8 percent.
Japan's Nikkei <> fell 0.6 percent, recovering from an
early drop of as much as 1.7 percent after gross domestic
product grew just 0.1 percent in the second quarter compared to
forecasts of 0.6 percent.
"What has been driving sentiment for a little while now has
been this concern about the loss of momentum in the global
recovery," said Mike Lenhoff, chief strategist and head of
research at Brewin Dolphin in London.
"The GDP figures out of Japan this morning clearly didn't
help. For the balance of the month, we are probably not going to
go anywhere. The earnings season was very good but it's behind
us now."
Yields on 10-year U.S. government bonds <US10YT=RR> fell 2
basis points to 2.659 percent after touching a 16-month low 0f
2.651 percent.
The fall in Treasury yields has been a big factor weighing
on the U.S. currency against the yen, because of the high recent
correlation between dollar/yen and Treasury yields. The dollar
was down 0.4 percent at 85.83 yen <JPY=>.
Against a basket of major currencies, the greenback <.DXY>
was down 0.3 percent, after rising in the previous five
sessions.
The euro recovered from near one-month lows against the
dollar, up 0.3 percent at $1.2787.
"There is nothing to cheer about," said Koen De Leus,
economist at KBC Securities. "Economic figures, certainly in the
United States, are really disappointing and pointing towards
going more and more close to a double dip. This time, it doesn't
hurt to be little bit cautious."
CHEAPER
European numbers on Friday gave a bullish outlook on growth
for Germany but not necessarily many other euro zone economies
facing stringent budget cuts in the second half of this year.
Corporate earnings in the recent season have generally been good
but the market's biggest concern is the stumbling U.S. economy.
In terms of valuations, MSCI Europe <> is looking
cheaper than U.S. S&P 500 <.SPX>, Japan's TOPIX <> and MSCI
emerging markets benchmark <.MSCIEF>.
MSCI Europe carried a one-year forward price-to-earnings of
10.7, compared with 12.36 for S&P 500, 14.05 for TOPIX and 10.8
for MSCI emerging markets index, Thomson Reuters DataStream
showed.
In the commodity market, copper <MCU3> advanced 0.8 percent,
helped by lower inventories and a weaker dollar. Crude prices
<CLc1> rose 0.3 percent, snapping a four-day losing run.
(Additional reporting by Atul Prakash and Anirban Nag in
London; editing by Patrick Graham)
