* Fed's dovish outlook hurts crude, stocks
* Euro slips against dollar on lingering debt concerns
By Dominic Lau
LONDON, June 24 (Reuters) - Global equities and crude prices
eased on Thursday on concerns over economic growth after the
U.S. Federal Reserve's pessimistic outlook, though the dollar
recovered from the previous session's losses.
Concerns over Greece were hanging over the euro zone, as the
cost of protecting its government debt against default hit a
record high. []
The Fed acknowledged a faltering pace of U.S. economic
recovery on Wednesday as it renewed its vow to hold benchmark
interest rates exceptionally low for an extended period.
[]
Its assessment followed data showing that sales of new homes
in the United States fell to their lowest level ever in May and
came with Europe still on the path of austerity to prevent a
Greek-style debt crisis.
"The negative tone on the speed and strength of the recovery
from the Federal Reserve is infringing on investor's
expectations and there's a sense that there will be a long
period of anaemic growth," said Henk Potts, analyst at Barclays
Wealth in London.
Europe's FTSEurofirst 300 <> fell for the third day,
down 0.9 percent and basic resources shares <.SXPP> shed 1.8
percent, shrugging off hopes new Australian Prime Minister Julia
Gillard could compromise on a controversial mining tax.
The European basis resources sector carried a one-year
forward price-to-earnings of 11.37, in line with its five-year
average of 11.34, according to Thomson Reuters DataStream.
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> drifted 0.1 percent lower, down for a third
consecutive day.
The index has fallen 5.9 percent this year, and carried a
one-year forward P/E of 11.9 versus a five-year average of 13.3,
according to DataStream.
U.S. stock index futures <SPc1> <DJc1> <NDc1> lost 0.6-0.7
percent, indicating a weaker start for Wall Street, ahead of U.S.
durable goods data and weekly jobless claims.
In Asia, Tokyo's Nikkei average <> was flat as
short-covering petered out, with charts showing further gains
were likely to be difficult.
Japan's annual export growth slowed for a third consecutive
month in May in a sign that its overall economic growth could
start to slow as the pace of recovery in overseas demand
moderates. []
DOLLAR RECOVERS
The dollar <.DXY> rose 0.1 percent against a basket of
currencies after losing 0.4 percent on Wednesday on the back of
Fed's assessment of a faltering pace of recovery.
The euro <EUR=> was down 0.2 percent at $1.2284. The single
currency has fallen 14 percent against the dollar this year.
"As the U.S. fiscal stimulus starts to wane, it brings back
the deflationary argument. Together with weak U.S. data, there
are reasons to be pessimistic and that cannot be a positive
environment for risk," said Gavin Friend, currency strategist at
National Australia Bank.
Five-year credit default swaps (CDS), an insurance-like
instruments against debt default, rose to a record high of 959.5
bps, from 934 bps in New York on Wednesday, CDS monitor CMA
DataVision said.
Five-year CDS on Portugal government debt rose to 335 basis
points from 320.4 bps on Wednesday.
The Greek/German government bond yield spread has widened
sharply this week because of expected forced selling at the end
of the month by passive indexed funds after Moody's Investors
Service became the second rating agency to downgrade Greece to
junk earlier this month.
The spreads of Greek 10-year bond <GR10YT=TWEB> over German
Bunds rose to 802 basis points (bpS) versus 792 bps at
Wednesday's settlement.
September Bund futures <FGBLc1> were 29 ticks higher at
128.91, and 10-year German yields <DE10YT=TWEB> fell 3.5 bps to
2.613 percent.
(Additional reporting by Simon Falush, Neal Armstrong, Kirsten
Donovan and George Matlock; Editing by Toby Chopra, Ron Askew)
