* Weak global manufacturing data sinks stocks
* U.S. in recession for past year, according to NBER
* Oil trades near $50 a barrel
* U.S. 10-year Treasury yield at 50-year low
By Daniel Bases
NEW YORK, Dec 1 (Reuters) - A spate of grim manufacturing
reports on Monday showing a global economic slowdown sent stock
markets in both the United States and Europe down 6 percent, as
investors piled into the safe haven of U.S. government bonds,
driving their yields to at least 50-year lows.
Crude oil prices slumped about 8 percent to around $50 as
OPEC deferred a decision to cut supply, driving down energy
shares on both sides of the Atlantic.
The National Bureau of Economic Research, regarded as the
arbiter of U.S. recessions, made official the U.S. economy
slipped into recession in December 2007, ending a 73-month
economic expansion.
Manufacturing data from China, Europe and America
illustrated the impact of economic decline, with a U.S.
manufacturing index falling to a 26-year low in November.
"Things are looking quite bleak. Everyone acknowledges
that," said Brian Gendreau, investment strategist at ING
Investment Management in New York. "The question is to what
extent is that already priced into the markets. Apparently, not
entirely."
The U.S. dollar rallied on a combination of safe-haven
flows and hopes that a substantial economic stimulus package
will bolster economic activity. The Japanese currency gained
ground as investors reversed risky trades funded by cheap yen.
"Until we're through the deterioration in the data then the
likelihood is that risk aversion will remain elevated and we'll
see renewed interest in lower-yielding currencies," said Derek
Halpenny, European head of global currency research at BTM
UFJ.
U.S. stocks slid on signs of the deepening global economic
slump, puncturing last week's market enthusiasm, with financial
services companies and retailers among Wall Street's biggest
casualties.
Major industrial companies also contributed to losses on
signs global demand is faltering.
Shortly after 1 p.m., the Dow Jones industrial average
<> was down 415.92 points, or 4.71 percent, at 8,413.12.
The Standard & Poor's 500 Index <.SPX> was down 50.69 points,
or 5.66 percent, at 845.55. The Nasdaq Composite Index <>
was down 91.48 points, or 5.96 percent, at 1,444.09.
With the holiday shopping season under way, investors fear
that retailers may turn in their bleakest sales in perhaps two
decades. The S&P retail index <.RLX> declined 7.1 percent, as
shares of department store operator Macy's Inc <M.N> tumbled
11.7 percent to $6.55.
Shares of Wal-Mart Stores <WMT.N>, the world's biggest
retailer and a Dow component, shed 4.1 percent to $53.62.
Among financials, shares of Citigroup <C.N> sank 16.5
percent to $6.92 after an influential analyst forecast more
losses for the major U.S. bank.
A slide in commodity prices pushed resource stocks into the
red, with aluminum producer Alcoa <AA.N>, a Dow component,
tumbling 10.2 percent to $9.66.
Factory activity in the United States fell to a reading of
36.2 in November from 38.9 in October, the weakest level since
1982, the Institute for Supply Management said. Readings below
50 indicate contraction in activity.
In Europe, The FTSEurofirst 300 index of leading European
shares closed down 6.04 percent to 810.04 <> following a
gain of more than 13 percent last week, with banks and mining
companies leading the way down.
Banks were the worst hit, with Standard Chartered Bank
<STAN.L> falling 14 percent and UBS <UBSN.VX> down 12 percent,
Fortis <FOR.BR> slipping 11 percent and BNP Paribas <BNPP.PA>
declining 7.6 percent.
Miners tracked weaker metals prices. BHP Billiton <BLT.L>,
Anglo American <AAL.L>, Vedanta Resources <VED.L>, Lonmin
<LMI.L>, Kazakhmys <KAZ.L>, Xstrata <XTA.L>, Antofagasta
<ANTO.L> and Rio Tinto <RIO.L> fell between 7 and 18 percent.
The Markit Eurozone Purchasing Managers Index for the
manufacturing sector slumped to 35.6 in November, the lowest
ever in the survey's 11-year history.
The grim reading reinforced expectations the European
Central Bank would cut interest rates later this week to 2.5
percent or even lower.
Interest rate futures are fully pricing in the chance that
the ECB would lower the cost of borrowing by 75 basis points on
Thursday to 2.50 percent as inflationary pressures ease.
In currencies, the euro <EUR=> was down 0.52 percent at
$1.2629 from a previous session close of $1.2695. Against the
Japanese yen, the dollar <JPY=> was down 2.45 percent at 93.13
from a previous session close of 95.470.
The yuan also tumbled against the dollar, heading for its
biggest daily decline since its peg to the dollar was abolished
in July 2005, on speculation China might adjust foreign
exchange policy, permitting more yuan weakness, to stimulate
its economy.
Benchmark 10-year U.S. Treasuries <US10YT=RR> were up
24/32, with the yield falling to 2.8379 percent.
U.S. light sweet crude oil <CLc1> fell $4.46, or 8.19
percent, to $49.97 per barrel.
Spot gold prices <XAU=> fell $43.00, or 5.27 percent, to
$772.50 an ounce.
Tokyo's Nikkei 225 <> fell 115.05 points or 1.35
percent to 8,397.22.
The MSCI world equity index <.MIWD00000PUS> fell 4.82
percent to 209.65, after rising 12.37 percent last week.
(Additional reporting by Natsuko Waki, Veronica Brown,
Jonathan Cable in London; Chris Reese, John Parry, Gertrude
Chavez-Dreyfuss, and Ellis Mnyandu in New York; Editing by
Leslie Adler)
