* MSCI world equity index down 0.6 percent at 334.63
* Japan quake, euro debt concerns spur safe-haven buying
* Bunds rise, U.S. crude down 3 pct
By Natsuko Waki and Caroline Copley
LONDON, March 11 (Reuters) - Global stocks fell to their
lowest in nearly six weeks on Friday and government bonds rose
as a huge earthquake in Japan and expectations Portugal will
have to seek financial aid prompted a sell-off in risky assets.
Portugal's 10-year bond yield and debt insurance costs rose
after government plans for additional spending cuts left
investors unconvinced, raising expectations the country would
need a future bailout. []
Japanese stock futures fell nearly 5 percent and the yen
fell briefly after the quake, the biggest to hit Japan in 140
years, struck the northeast coast and triggered a 10-metre
tsunami. []
Investor morale has been souring in the past few weeks as
concerns rose that unrest in Libya and the wider Arab world may
further boost oil prices, and resulting inflationary pressures
could slow the global economic recovery.
"Markets are in a correction mode. If you get natural
disasters at a time when the markets are worried about something
else, they can compound the worries," said Bernard McAlinden,
investment strategist at NCB Stockbrokers, in Dublin.
"But there is no reason to suggest that the stock market is
going to collapse. The underlying tendency of the market is
still to have net buyers as money rotates at the margin out of
safe-haven bonds."
World stocks as measured by MSCI were down 0.6 percent to
334.82, falling to their lowest level since the end of January.
The MSCIindex had hit 30-month highs in mid-February.
The FTSEurofirst 300 index of top European shares <>
fell 0.8 percent after earlier hitting a three-month low. MSCI
emerging stocks <.MSCIEF> were down 1.1 percent.
The yen <JPY=> fell as low as 83.29 per dollar, but it later
recovered to 82.22, drawing support from falling risk appetite
and expectations of repatriation in flows.
U.S. stock futures <SPc1> were down 0.1 percent, pointing to
a weaker open on Wall Street, after a heavy sell-off in the
previous session.
OIL FALLS
U.S. crude oil <CLc1> fell 3.1 percent to $99.53 a barrel
while Brent crude <LCOc1> lost 2.5 percent to $112.58. OPEC said
in its report it was ready to take action to increase supply if
needed.
A protest in the Saudi Arabian city involving 200 protesters
has so far had little impact on oil prices. []
Bund futures were up 46 ticks <FGBLc1> while the euro <EUR=>
fell 0.2 percent against the dollar.
The cost of insuring Portuguese debt against default for
five years rose 16 basis points to 520 bps, while the 10-year
bond yield held at euro lifetime highs.
The yield spread between Portuguese and German 10-year
government bonds was 13 basis points more on the day at 457 bps,
its widest since November.
Euro zone leaders are set to agree a "competitiveness pact"
at a summit on Friday but seem unlikely to resolve sharp
differences over the size and scope of the rescue fund that
Lisbon would tap if it decided to seek help.
Portugal announced additional spending cuts and reforms to
cut its deficit by an extra 0.8 percent of gross domestic
product this year in an attempt to stave off intense pressure to
take a bailout.
"I think this is Portugal still desperately trying to prove
that it has the political will to push through these painful
measures, said Colin Ellis, chief economist at BVCA in London.
"Ultimately however, the interest rates they're paying in
the market are unsustainable. There's still a good chance they
will need some support at some stage."
(Additional reporting by Atul Prakash and Kirsten Donovan;
Editing by Catherine Evans)
