* Reports of Saudi Arabia unrest weigh on stocks, oil
* China's unexpected trade deficit fuels growth worries
* Spain's ratings downgrade drives euro down
(Updates with U.S. markets close, adds Nikkei futures)
By Walter Brandimarte
NEW YORK, March 10 (Reuters) - World stocks and commodities
sank on Thursday after an unexpected trade deficit in China
fueled concerns about the global economy, while the euro fell
after a downgrade of Spain's credit rating by Moody's.
Stocks were pushed even lower and oil prices erased part of
early losses in the afternoon as police confronted protesters
in Saudi Arabia. Witnesses said shots were heard and some
people were wounded. For details, see [].
Asian stocks looked set to open lower, with Nikkei futures
traded in Chicago <NKH1> falling more than 2 percent to
10,335.00.
Investors fear unrest could spread from Libya to other
oil-producing nations in the Middle East, driving energy costs
higher and choking off the global economic recovery.
"Saudi Arabia is the main supplier of oil around the world,
so people are concerned," said Axel Merk, president and chief
investment officer of Merk Investments in Palo Alto,
California.
"People are starting to realize that the turmoil in the
Middle East is going to affect oil supplies for a long, long
time," he added.
Still, U.S. crude oil prices <CLc1> fell 1.6 percent to
$102.70 a barrel as investors fretted about negative economic
data from China, the world's second-largest consumer of oil.
Brent prices <LCOc1> ended 51 cents lower at $115.43.
China posted a trade deficit of $7.3 billion for February
-- its first since March 2010 and the biggest since February
2004 -- as its exports suffered a larger-than-expected impact
from the Lunar New Year holiday.
U.S. stocks fell nearly 2 percent and the Dow sank below
12,000. Wall Street was also pressured by an unexpectedly large
increase in claims for unemployment benefits in the United
States and a much wider-than-expected U.S. trade deficit.
[]
"Overseas issues continue to play a role in U.S. markets.
The situation in Europe isn't complete, the market continues to
have concerns about sovereign credit," said Subodh Kumar, chief
investment strategist at Subodh Kumar & Associates in Toronto.
"Markets have been hoping that China would lead the
recovery, but when you put this (U.S.) data with slower growth
out of China, the idea that everything looks normal is going
away."
The Dow Jones industrial average <> lost 228.48 points,
or 1.87 percent, to 11,984.61, while the Standard & Poor's 500
Index <.SPX> fell 24.91 points, or 1.89 percent, to 1,295.11.
The Nasdaq Composite Index <> lost 50.70 points, or 1.84
percent, to 2,701.02.
In Europe, the FTSEurofirst 300 <> index of top
shares closed down 1.13 percent at 1,131.78, its lowest closing
level for 2011.
Global stocks measured by MSCI's All-Country World Index
<.MIWD00000PUS> slid 1.9 percent.
SPAIN DOWNGRADED
The euro <EUR=> fell 0.8 percent to $1.3796 after Moody's
downgraded Spain to Aa2 from Aa1, warning of further cuts to
the country's credit ratings. []
The move came two days after Moody's downgraded Greece by
three notches, fueling negative sentiment toward struggling
euro zone sovereign borrowers on the eve of a summit of
currency bloc leaders. []
"This is a reminder they need to come up with a
comprehensive, believable solution by the end of the month,"
said Colin Ellis, chief economist at BVCA.
Demand for safe-haven assets was supported by the euro-zone
debt concerns and the Middle East instability, encouraging
investors to bid aggressively for reopened 30-year bonds during
an auction in the afternoon.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> rose
29/32 in price, with the yield at 3.3621 percent, while 30-year
bonds <US30YT=RR> gained 54/32 in price, with the yield at
4.5023 percent.
(Additional reporting by Herbert Lash, Caroline Valetkevitch,
Chris Reese; Editing by Kenneth Barry and Dan Grebler)
