* Yen, Swiss franc rise on safe-haven bid
* Stocks up after profit-taking, technology companies lead
* Commodities rise on weak dollar; gold hits 7-week high
(Updates with closing prices)
By Manuela Badawy
NEW YORK, Aug 16 (Reuters) - U.S. Treasury prices rose on
Monday and global stocks were little changed as weak growth in
Japan added to worries over a tepid global economic recovery
and cut investors' appetite for risk.
Currencies perceived as safe harbors such as the yen and
Swiss franc rose and gold hit a seven-weeks high, as weak
economic growth around the world spurred talk of deflation.
News that Japan's economy expanded by only 0.1 percent in
the second quarter also dragged on crude oil prices, on fears
that Japan, the world's fourth largest energy consumer, would
slow oil purchases.
"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 the April-June period,
representing an annualized increase of 0.4 percent as export
growth moderated and a stimulus-driven recovery in consumption
ran out of steam.
The growth was far below the first-quarter's 4.4 percent
annualized growth rate.
With the latest output figures, Japan slipped behind China
in the ranking of world economies. China now stands as the
world's second-largest economy.
U.S. stock indexes finished barely changed, suggesting
several days of losses have not convinced institutions the
market has become attractive. Composite volume was 5.69 billion
shares, the lowest so far this year.
The Dow Jones industrial average <> closed down 1.14
points, or 0.01 percent, at 10,302.01. The Standard & Poor's
500 Index <.SPX> rose 0.13 points, or 0.01 percent, at
1,079.38. The Nasdaq Composite Index <> gained 8.39
points, or 0.39 percent, at 2,181.87.
Earlier, U.S. data on the housing market and manufacturing
showed the economic recovery losing strength, while in Europe,
shares closed lower as the data from the United States and
Japan hurt sentiment.
U.S. homebuilder sentiment unexpectedly fell for a third
straight month in August to its lowest level since March 2009,
according to an industry survey.
And while the New York Federal Reserve Bank reported that
its gauge of manufacturing in New York state rose in August
after dropping in July, the Empire State index came in below
forecast.
The pan-European stocks FTSEurofirst 300 index <>
closed down 0.01 percent. World stocks measured by the MSCI
All-Country World Index <.MIWD00000PUS> were up 0.3 percent
after falling for four days in a row. The Thomson Reuters
global stock index <.TRXFLDGLPU> gained 0.41 percent.
Japan's Nikkei <> fell 0.6 percent, recovering from an
early drop of as much as 1.7 percent.
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.
The Swiss franc and the Japanese yen, both used to fund
leveraged carry trades, are typically sought in times of market
stress.
Against the Japanese yen<JPY=> , the dollar was down 1.01
percent at 85.32 from a previous session close of 86.190.
The dollar fell 1.2 percent to 1.0375 francs after hitting
its lowest since Aug. 6. The euro was 0.5 percent lower against
the Swiss franc <EURCHF=> at 1.3324, having earlier dropped to
its lowest since July 8.
However, the euro <EUR=> was up 0.54 percent at $1.2818
from a previous session close of $1.2750.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
28/32, with the yield at 2.57 percent, after hitting a 17-month
low.
The 30-year U.S. Treasury bond <US30YT=RR> rose 82/32 in
price, with the yield at 3.71 percent, down from 3.86 percent
at Friday's close and a 16-month low. The two-year U.S.
Treasury note <US2YT=RR> rose 2/32, its yield at 0.5 percent.
Hedge funds and speculative traders have led the charge in
buying long-dated debt, betting that yields will fall in a
deflationary climate.
On Monday, central banks, overseas fund managers, pension
funds, insurance companies, which have been on the sidelines,
joined the fray.
"They threw in the towel and pushed the 'buy' button," said
Derrick Wulf, portfolio manager at Dwight Asset Management in
Burlington, Vermont.
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 0.86 percent to $1,224.00 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 the weaker dollar. Crude oil <CLc1> prices fell
0.2 percent to settle at $75.24 as the the Japanese and U.S.
data fed worries about the energy demand outlook.
(Additional reporting by Edward Krudy, Emily Flitter, and Nick
Olivari in New York and Dominic Lau in London; Editing by
Leslie Adler)
