* World stocks, oil fall on persistent economic worries
* Euro weakens on dovish central banker comments
* Treasuries prices erase gains, fall before debt supply
(Updates with U.S. markets close)
By Walter Brandimarte
NEW YORK, Aug 20 (Reuters) - Lingering fears about economic
growth drove world stocks to a one-month low on Friday, while
boosting the safe-haven appeal of U.S. government bonds and the
U.S. dollar.
The euro currency hit a more than five-week low near
$1.2660 after European Central Bank Governing Council member
Axel Weber said the ECB should extend its loose monetary
stance, raising fears of more economic weakness ahead in the
euro zone. For details, see [].
Oil prices also fell more than 1 percent as investors
continued to worry about the 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."
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For a graph on U.S. payrolls and the world economy, see:
http://link.reuters.com/sax36n
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In the U.S. Treasury bond market, yields on benchmark
10-year and 30-year Treasuries initially fell to their lowest
in nearly a year and a half. However, they rose later in the
session as investors braced for $109 billion supply of
coupon-bearing debt coming next week when the Treasury holds
its debt auctions.
Also contributing to the pullback in the Treasuries market
was a late rebound in some U.S. tech shares, which helped key
U.S. stock indexes trim early losses.
The Dow Jones industrial average <> closed down 57.59
points, or 0.56 percent, at 10,213.62, while the Standard &
Poor's 500 Index <.SPX> lost 3.94 points, or 0.37 percent, to
1,071.69. But the Nasdaq Composite Index <> ended up 0.81
points, or 0.04 percent, at 2,179.76.
"No one's making a big bet either way, it's just short-term
moves and the net is, nothing is getting done." said Ryan
Detrick, senior technical strategist at Schaeffer's Investment
Research in Cincinnati, Ohio.
Exxon Mobil Corp <XOM.N>, the largest stock in the S&P 500,
slid 0.67 percent as oil prices fell on concerns that a global
economic slowdown would reduce demand for the commodity.
U.S. crude oil <CLc1> ended down 97 cents, or 1.3 percent,
at $73.46 a barrel, the lowest since front-month prices ended
at $71.98 on July 6.
The MSCI All-Country World equity index <.MIWD00000PUS>
slid 0.99 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.
DOLLAR GAINS
The dollar saw a renewed safe-haven bid, reaching a
one-month high against a basket of major currencies measured by
the U.S. Dollar Index <.DXY>, which gained 0.68 percent.
The greenback also gained 0.32 percent against the Japanese
yen <JPY=> to 85.61.
The euro was further pressured by comments from 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 0.85 percent lower on the
day at $1.2711, after hitting its lowest point 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.
As U.S. Treasuries prices fell late in the session, 2-year
notes <US2YT=RR> were down 1/32 in price, with the yield at
0.4952 percent. The 30-year bonds <US30YT=RR> fell 4/32 in
price, with the yield at 3.6593 percent.
Earlier, two-year yields had fallen to a record low of 0.47
percent while those on 30-year bonds reached a 16-month low of
3.61 percent.
(Additional reporting by Leah Schnurr, Richard Leong, and
Wanfeng Zhou, Editing by Chizu Nomiyama)
