* Dollar slips vs yen as BOJ move limited
* Wall Street marks lowest volume of the year
* M&A activity underpins equity markets
(Updates with close of U.S. markets)
By Al Yoon
NEW YORK, Aug 30 (Reuters) - World stocks fell on Monday on
skepticism that governments can reverse a slowdown in global
growth, while the yen rallied after Japan's action to expand
loans to banks disappointed investors who had wanted more
aggressive measures to curb the currency's rise.
Investors' worries about the economy also weighed on the
price of crude oil, while U.S. Treasury prices rose in a
rebound from a sharp sell-off on Friday after Federal Reserve
Chairman Ben Bernanke signaled that the U.S. central bank was
not on the verge of a new round of bond buying.
U.S. President Barack Obama's attempt on Monday to address
worries the recovery is faltering appeared to fall short. U.S.
stocks extended an early slide, with all three major indexes
closing down more than 1 percent. [].
A government report on Monday that U.S. consumer spending
rose at the strongest pace in four months in July did little to
to reverse a bearish tone set by a string of other data
suggesting the economy is slowing.
The Commerce Department data also showed that consumer
spending, which typically accounts for about two-thirds of U.S.
economic activity, was supported by a small rise in incomes.
For details, see [].
Investors were also hesitant ahead of more closely watched
data on manufacturing, services and August non-farm payrolls
due later in the week.
European markets were subdued on Monday, with British
markets closed for a bank holiday.
"Equity markets are going to be a little bit defensive this
week as the economic data is likely going to show more slowing
in the economy," said John Brady, senior vice president at MF
Global in Chicago.
At the close, the Dow Jones industrial average <> was
down 140.92 points, or 1.39 percent, to 10,009.73. The Standard
& Poor's 500 Index <.SPX> dropped 15.67 points, or 1.47
percent, to 1,048.92 and the Nasdaq Composite Index <>
declined 33.66 points, or 1.56 percent, to 2,119.97.
Volume was the lowest for the year-to-date.
Sectors associated with economic growth took the biggest
hits, incouding banks and consumer discretionary stocks.
Citigroup <C.N> fell 2.4 percent to $3.67, while JP Morgan
<JPM.N> fell 2.0 percent to $35.85. The KBW Bank Index lost
1.21 percent.
News on mergers and acquisitions bolstered some stocks, but
was not enough to turn the market positive.
Genzyme Corp <GENZ.O> rose 3.39 percent to $69.91 after
France's Sanofi-Aventis SA <SASY.PA> disclosed a cash offer of
$18.5 billion, or $69 per share, to buy the U.S. biotechnology
company. Later, Genzyme broke a five-week silence to reject the
bid. For details, see []
Genzyme shares gained, but U.S.-listed shares of Sanofi
<SNY.N> fell 1 percent to $28.63.
Expectations of increased mergers and acquisitions have
buoyed stock markets in recent days as the activity often
bolsters the equity of the parties or their sectors.
"There is a lot of cash still out there for a lot of these
companies, and they need to start using it," said Joe Saluzzi,
co-manager of trading at Themis Trading in Chatham, New Jersey.
Intel Corp <INTC.O> agreed to buy the wireless unit of
German chipmaker Infineon Technologies AG <IFXGn.DE> for $1.4
billion, enabling the U.S. chipmaker to boost its presence in
the smartphone market. Intel shed more than 2 percent to
$17.96.[]
MSCI's all-country world stock index <.MIWD00000PUS>
dropped 0.42 percent and the Thomson Reuters global stock index
<.TRXFLDGLPU> fell 0.62 percent. MSCI's emerging market
sub-index <.MSCIEF> gained 0.23 percent.
In Europe, the FTSEurofirst 300 <> ended slightly
lower, as the concerns about the global economic recovery
outweighed support from the merger and acquisition news.
The pan-European FTSEurofirst 300 closed down 0.1 percent
at 1,025.48 points. Trading was thin, with volumes on the index
just 50.1 percent of the 90-day average.
Pharma shares featured among the best performers, with
Sanofi-Aventis <SASY.PA> up 0.7 percent.
Japanese stocks closed up nearly 1.8 percent, but only
after paring strong gains when the Bank of Japan made minor
tweaks in policy, disappointing markets looking for more
aggressive action against deflation. The yen rose broadly.
"The market was underwhelmed," said Marc Chandler, global
head of currency strategy at Brown Brothers Harriman in New
York. "Japanese officials continued to struggle to get ahead of
the curve of expectations."
The yen hit the day's high against the dollar and the euro
after Bank of Japan Governor Masaaki Shirakawa said after
meeting with Prime Minister Naoto Kan that Kan had not made any
requests on the central bank's monetary policy.
In late New York trade, the dollar was down 0.77 percent
against the yen <JPY=> at 84.53 yen, matching its session low.
The dollar rose 0.29 percent against a basket of currencies
<.DXY>. The euro fell 0.78 percent to $1.2662.
U.S. Treasury debt prices rose as traders clawed back some
of Friday's sharp losses, when Fed Chairman Bernanke signaled
the U.S. central bank was not on the verge of a new round of
bond buying.
Yields on benchmark 10-year Treasury notes <US10YT=RR> was
up 34/32, with the yield at 2.53 percent.
In commodities, U.S. light sweet crude oil <CLc1> fell 63
cents, or 0.63 percent, to settle at $74.70 per barrel. Gold
<XAU=> rose 55 cents, or 0.04 percent, to $1236.70.
(Additional reporting by Jeremy Gaunt, Atul Prakash, Brian
Gorman and Jessica Mortimer in London and Chuck Mikolajczak,
Edward Krudy and Chris Reese in New York; Editing by Leslie
Adler)
