* Global shares on track for biggest 1-day fall in 4 weeks
* Oil falls sharply on demand, economic worries
* Yen up as investors unwind carry trades; dollar down
(Updates prices)
By Wanfeng Zhou
NEW YORK, April 12 (Reuters) - Oil prices dropped sharply
for a second day on Tuesday and helped drag world stock prices
down after Goldman Sachs warned that crude had gotten ahead of
fundamentals and was set to fall.
Oil traded in New York was down more than 7.0 percent in
two days after Goldman Sachs predicted Brent prices would fall
back to $105 in "coming months," down from $120 on Tuesday, and
after the International Energy Agency said high prices could be
eroding demand.
World stocks, as measured by the MSCI's main world equity
index <.MIWD00000PUS>, were last down 1.2 percent, the index's
biggest one-day decline in four weeks.
Worries over global growth were heightened after Japan's
economic minister warned that damage caused by last month's
earthquake and tsunami could be worse than initially thought
for the world's third-largest economy. []
Japan's move to put the severity of radiation leakage at
its stricken Fukushima nuclear plant on a par with the worst
nuclear disaster, at Chernobyl, also weighed on sentiment.
[]
"The market is increasingly becoming concerned about the
situation in Japan and that high oil prices and high commodity
prices will eventually hurt economic growth," said Mark Bronzo,
money manager at Security Global Investors in Irvington, New
York.
U.S. stocks fell after disappointing revenue figures from
aluminum maker Alcoa Inc <AA.N> started the earnings season
late on Monday.
The Dow Jones industrial average <> was down 108.94
points, or 0.88 percent, at 12,272.17. The Standard & Poor's
500 Index <.SPX> fell 9.92 points, or 0.75 percent, to
1,314.54. The Nasdaq Composite Index <> lost 27.01 points,
or 0.97 percent, at 2,744.50.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
22/32, with the yield at 3.5017 percent, on a safety bid. In
addition, a $32 billion sale of three-year notes drew good
demand, pricing at a slightly lower high yield, at 1.28
percent, than where the notes traded before the auction.
The FTSEurofirst 300 index <> of top European shares
slipped 1.7 percent, with miners and energy firms among the
heaviest losers. Emerging markets <.MSCIEF>, which count
several resource exporters in their ranks, fell 1.9 percent.
Brent crude oil <LC0c1> dropped $3.32 to $120.66 a barrel,
pulling back from Monday's 2-1/2 year high after the warnings
from the IEA [] and Goldman Sachs <GS.N>. U.S.
crude <CLc1> lost $3.88 to 106.04 a barrel.
Societe Generale also said rising gasoline prices in the
United States were fueling a debate about "demand destruction"
in the world's top economy. "Geopolitics (are) still critical.
But with prices high, markets may be having doubts on demand,"
SocGen said.
Spot gold <XAU=> fell from Monday's record high while
silver <XAG=> sagged from the previous session's 31-year high.
The Reuters-Jefferies CRB index <.CRB>, a global
commodities benchmark, fell about 2 percent in its sharpest
one-day decline in a month as raw materials markets came under
pressure from a sell-off in oil.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For oil futures positions vs. oil price since 2007:
http://r.reuters.com/duc98r
All Commodities Futures Trading Commission positions:
http://r.reuters.com/buv87r
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SAFE-HAVEN DEMAND
The yen and Swiss franc rose as jittery investors sold
riskier trades funded by borrowing in the two low-yielding
currencies.
"Carry trades are owned heavily and looked overextended,
especially the yen crosses. These are the ones looking shaky,"
said Tom Fitzpatrick, chief technical strategist at CitiFX in
New York.
The yen firmed to a 1-1/2 week high versus the U.S. dollar
<JPY=>, though gains are likely to be curbed by the Bank of
Japan's perceived determination to keep monetary policy loose
to aid economic recovery.
The dollar fell 1.2 percent against the Swiss franc
<CHF=EBS> to 0.8957. It earlier dropped to 0.89421, its lowest
in more than three weeks.
The euro rose to a 15-month high against the dollar above
$1.45, boosted by reported buying from China and news the
world's second-largest economy was willing to purchase more
Spanish debt.
Dovish comments from key U.S. Federal Reserve officials
weighed on dollar sentiment. Two of the Fed's most powerful
officials, Janet Yellen and William Dudley, said the U.S.
central bank should stick to its super-easy monetary policy as
inflation is not a threat and unemployment remains too high.
[]
The U.S. dollar index <.DXY>, which tracks the greenback
against a basket of major currencies, was down 0.3 percent at
74.835 after hitting 74.704, its lowest since December 2009.
(Additional reporting by Angela Moon and Gertrude
Chavez-Dreyfuss in New York and Sebastian Tong in London;
Editing by Dan Grebler)
