* Swiss franc rallies broadly on safe-haven demand
* Dollar index falls after rising for five days
* 10-yr, 30-yr U.S. Treasury yields hit 16-month lows
* World stocks steady after a 4-day losing run
By Dominic Lau
LONDON, Aug 16 (Reuters) - The euro fell sharply versus
Swiss franc on Monday and safe-haven U.S. and German government
bond yields hit new lows after much weaker than expected growth
numbers from Japan added to worries over a faltering global
economic recovery.
The pan-European FTSEurofirst 300 <> lost 0.4 percent,
while U.S. stock index futures <SPc1> <DJc1> <NDc1> were flat to
down 0.2 percent, pointing to a softer start for Wall Street.
Benchmark 10-year Germany yields <DE10YT=TWEB> hit a record
low of 2.362 percent, while yields on 10-year U.S. government
bonds <US10YT=RR> fell 4 basis points to 2.6411 percent after
touching a 16-month low of 2.638.
The yield on 30-year Treasury bonds <US30YT=RR> also reached
a 16-month low of 3.799 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."
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 eased 0.7 percent to 85.66 yen <JPY=>. Against a
basket of major currencies, the greenback <.DXY> was down 0.4
percent, after rising in the previous five sessions.
The euro fell 0.8 percent versus the franc <EURCHF=> at
1.3297. However, the single currency <EUR=> was up around 0.5
percent at $1.2812.
GERMANY VS THE REST
"The problem for the euro is that growth is rather
concentrated in Germany, with the periphery still struggling,"
said analyst at Credit Agricole CIB in a client note.
The premium investors demand to hold 10-year Irish and Greek
government bonds rather than Germany Bunds rose, and the cost of
insuring their debt against default also increased.
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.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS>, however, were flat, after falling for four days
in a row.
"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."
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 1 percent,
helped by lower inventories and a weaker dollar. Crude prices
<CLc1> rose 0.4 percent, snapping a four-day losing run.
(Additional reporting by Atul Prakash, Neal Armstrong and
Anirban Nag in London; Editing by Toby Chopra)
