* U.S. Treasury prices rise on Japan weak data
* Yen, Swiss franc rise on safe-haven bid
* Stocks zig-zag, technology companies help
* Commodities rise on weak dollar; gold hits 7-wk high
(Updates with U.S. markets open, changes dateline, byline,
previous LONDON)
By Manuela Badawy
NEW YORK, Aug 16 (Reuters) - Safe-haven U.S. Treasury
prices rose on Monday while global stocks oscillated as weak
growth in Japan added to worries over a tepid global economic
recovery.
Currencies such as the yen and Swiss franc rose and gold
touched its strongest in seven weeks, boosted by their
safe-haven appeal as weak economic growth around the world
spurred talk of deflation.
"Bond markets around the world are rallying, with yields
hitting new lows," said Peter Boockvar, an equity strategist at
Miller Tabak & Co in New York. He added that investors were
paring back their exposure to riskier assets after the data
dented confidence in the Asian recovery.
"With their (Japan's) exposure to Asia, people were hoping
for more strength," Boockvar said.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
up 25/32, with the yield at 2.5893 percent, hitting a 17-month
low.
The 30-year U.S. Treasury bond <US30YT=RR> was trading 2
points higher in price, with the yield at 3.7477 percent, down
from 3.86 percent at Friday's close and a 16-month low.
The 2-year U.S. Treasury note <US2YT=RR> was up 1/32, its
yield at 0.5043 percent.
"The phrase du jour is going to be deflation and it's not
only going to last for a day but for some time," said Christian
Cooper, senior rates trader at Jefferies & Co in New York.
"There's real concern that without further stimulation of
the economy, the overall weakness could lead not only to a
double dip but to outright price deflation ... it may be an
actual event as opposed to a concern."
Japan's gross domestic product grew a much
slower-than-expected 0.1 percent in April-June, translating to
an annualized increase of 0.4 percent as export growth
moderated and a stimulus-driven recovery in consumption ran out
of steam.
That was far below 4.4 percent annualized growth in the
first three months of the year. [] []
U.S. stocks traded between negative and positive territory,
yet the Nasdaq later turned positive, buoyed by gains in
large-cap technology companies, including Cisco Systems Inc
<CSCO.O>.
The Dow Jones industrial average <> was down 9.08
points, or 0.09 percent, at 10,294.07. The Standard & Poor's
500 Index <.SPX> slipped 1.20 points, or 0.11 percent, to
1,078.05. The Nasdaq Composite Index <> was up 8.43
points, or 0.39 percent, at 2,181.91.
European stocks FTSEurofirst 300 <> lost 0.03
percent, while world stocks measured by the MSCI All-Country
World Index <.MIWD00000PUS> was up 0.3 percent after falling
for four days in a row. The Thomson Reuters global stock index
<.TRXFLDGLPU> gained 0.38 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
with 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."
The fall in Treasury yields has been a big factor weighing
on the U.S. currency against the yen because of the recent high
correlation between dollar/yen and Treasury yields.
Against the Japanese yen, the dollar <JPY=> was down 1.03
percent at 85.30 from a previous session close of 86.190.
The dollar fell 1.4 percent to 1.0355 francs after hitting
its lowest since August 6 <CHF=>. The euro was 0.5 percent
lower against the Swiss franc <EURCHF=> at 1.3335, having
earlier dropped to its lowest since July 8.
However, the euro <EUR=> was up 0.72 percent at $1.2842
from a previous session close of $1.2750.
In the commodity market, gold rose to its highest level
since early July, as the gloomy Japanese economic data stoked
investor concern about the pace of global economic recovery.
Spot gold <XAU=> rose 0.85 percent to $1,223.90 an ounce
after hitting an intraday day high of $1,227.15 -- its highest
since July 1. Bullion struck a record high around $1,264 in
June.
Copper <MCU3> advanced 1 percent, helped by lower
inventories and a weaker dollar, and crude oil prices <CLc1>
edged 0.04 percent higher at $75.46 on a weaker dollar but was
held back by worries of a deceleration of the global economic
recovery.
(Additional reporting by Edward Krudy, Emily Flitter, and Nick
Olivari in New York and Dominic Lau in London; Editing by Dan
Grebler)
