* World stocks, oil plunge on persistent economic worries
* Euro falls over 1 pct on dovish central banker comments
* Yields on 10, 30-year Treasury bonds at 1-1/2 year lows
(Updates with European markets close)
By Walter Brandimarte
NEW YORK, Aug 20 (Reuters) - Investors dumped stocks on
Friday, rushing into safe-haven assets such as U.S. Treasury
debt and the U.S. dollar as concerns about the global economic
recovery increased.
Yields on benchmark 10-year and 30-year Treasuries neared a
1 1/2-year low as a large number of investors flocked to the
long-end of the curve -- a sign of growing expectations for
ultra-low interest rates.
The euro dropped more than 1 percent against the dollar
after European Central Bank Governing Council member Axel Weber
said the ECB should extend its loose monetary stance, which was
viewed as suggesting more weakness ahead in the euro zone. For
details, see [].
Oil prices also fell more than 1 percent as investors
continued to worry about poor U.S. jobs and manufacturing
numbers from Thursday.
U.S. jobless claims hit a nine-month high and a U.S.
regional manufacturing index showed the first contraction in a
year, reviving fears of a double-dip recession in the world's
largest economy.
"Basically growth is just not there," said Dave Rovelli, a
trader at Canaccord Adams in New York. "Until this
administration figures out how to get people hired, we are
going to be seeing a lot of these big up days, big down days,
and the market's going to be all over the place."
The MSCI All-Country World equity index <.MIWD00000PUS>
slid 1.4 percent while the FTSEurofirst 300 index <>
closed 0.67 percent lower in its third straight session of
losses. Both indicators were at their lowest in one month.
European construction stocks continued their slide from
Thursday's session when Holcim <HOLN.VX>, the world's
second-biggest cement maker, posted disappointing first-half
earnings. Holcim, Saint-Gobain <SGOB.PA> and HeidelbergCement
<HEIG.DE> slipped 2.1 to 2.6 percent.
Key U.S. stock indexes slid about 1 percent.
The Dow Jones industrial average <> dropped 110.42
points, or 1.08 percent, to 10,160.79, while The Standard &
Poor's 500 Index <.SPX> lost 10.37 points, or 0.96 percent, to
1,065.26. The Nasdaq Composite Index <> was down 16.30
points, or 0.75 percent, at 2,162.65.
Exxon Mobil Corp <XOM.N>, the largest stock in the S&P 500,
dropped about 1 percent as oil prices fell on concerns that a
global economic slowdown would reduce demand for the
commodity.
U.S. crude oil <CLc1> was down $1.12, or 1.5 percent, at
$73.31 per barrel.
TREASURIES, DOLLAR GAIN
U.S. Treasury debt and the dollar rallied as investors
avoided assets considered riskier.
Yields on U.S. two-year notes <US2YT=RR> fell to a record
low of 0.47 percent while those on 30-year bonds fell to
another 16-month low of 3.61 percent.
The greenback reached a one-month high against a basket of
the major currencies as measured by the U.S. Dollar Index
<.DXY>, which gained 0.87 percent.
It erased earlier losses and gained 0.39 percent against
the Japanese yen <JPY=> to 85.67.
The euro was further pressured by comments from the
Bundesbank chief Axel Weber, who said it would be "wise" to
extend unlimited liquidity to banks past the end of 2010 and
resume discussions to exit loose monetary conditions next
year.
The European single-currency was 1.08 percent lower on the
day at $1.2681, the lowest since mid-July, according to Reuters
data.
Weber's "comments simply confirm what many already expect
from the ECB, that the aggregate economy (despite recent solid
performance from Germany) is not yet prepared to be taken off
of monetary policy life support," said Sacha Tihanyi, a
currency strategist at Scotia Capital in Toronto.
(Additional reporting by Emily Flitter, Edward Krudy, Nick
Olivari; Editing by Kenneth Barry)
