* Wall Street follows European and Asian markets lower
* Bond prices rise as flu jitters spur safety bid
* Dollar, yen gain as pandemic fears stoke risk aversion
* Oil falls below $49 a barrel on worries of slowdown
(Adds close of European markets)
By Herbert Lash
NEW YORK, April 27 (Reuters) - Oil pared losses and world
stocks seesawed on Monday as cost-cutting plans by General
Motors and economic data offset fears that a flu outbreak could
spread into a pandemic and further strain a global recession.
Crude was still lower on the session but prices pulled back
above $50 a barrel at one point from losses of almost 7 percent
as fears eased about a potential global swine flu pandemic.
Government debt prices also retreated from session peaks as
European stocks recovered from early declines, thanks to gains
in defensive shares and drugmakers such as GlaxoSmithKline
<GSK.L> that could profit from flu vaccine sales.
"Since the opening bell a lot of stories have come out
taking the view that this swine flu outbreak is not a major
threat to the global economy," said William Sullivan, chief
economist at JVB Financial Group in Boca Raton, Florida.
"It's a dramatic adjustment from where we were 24 hours
ago, when a sense of panic was starting to take hold. That
allowed stocks to erase losses and it reduced the need for
safety," Sullivan said.
Mexico said a new flu virus has killed up to 149 people and
ordered all schools to close on Monday as the disease spread in
the United States, Canada and Europe, raising fears of a
pandemic. For more see [].
After 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was down 17.20 points, or 0.21 percent, at 8,059.09. The
Standard & Poor's 500 Index <.SPX> was down 4.39 points, or
0.51 percent, at 861.84. The Nasdaq Composite Index <> was
down 6.53 points, or 0.39 percent, at 1,687.76.
U.S. stocks had marched into positive territory by late
morning only to turn slightly lower as lingering fears of a
global flu outbreak slammed travel and leisure stocks. The AMEX
Airline index <.XAL> slumped 11.4 percent.
Investors who reckoned markets would fall on fears that the
flu outbreak in Mexico could spread worldwide with dire
consequences were forced to reverse their bets and buy stocks.
"Unless there is some substance which suggests that this is
going to be a sustainable story, it's just a story for today.
It looks like it's playing itself out," said Padhraic Garvey,
strategist at ING in Amsterdam.
GM <GM.N> shares jumped 23 percent after the troubled
automaker announced a sweeping restructuring that investors
hoped would keep the company alive as it tries to secure
government funding. [])
Cell-phone chip supplier Qualcomm Inc <QCOM.O> was a bright
spot on the Nasdaq, up almost 5 percent after it raised its
full-year revenue target on signs of market improvement,
despite swinging to a quarterly loss but. []
Shares of major U.S. airlines Continental <CAL.N>, Delta
Air Lines <DAL.N>, UAL Corp <UAUA.O> and American Airlines
parent AMR Corp <AMR.N> all slumped 15 percent or more.
European counterparts also fell, but not nearly as much.
Lufthansa <LHAG.DE> fell 9.3 percent, British Airways <BAY.L>
7.8 percent and Air France-KLM <AIRF.PA> 6.6 percent.
The FTSEurofirst 300 <> index of top European shares
closed up 0.4 percent at 813.69.
Recent economic data that has suggested the recession could
be abating helped U.S. and European stocks pull back, as did a
smattering of economic reports.
In Europe, Italian consumer confidence unexpectedly jumped
in April to its highest since December 2007, with sentiment
improving over the jobs outlook and the overall state of the
economy. []
The vacancy rate in privately owned American homes fell in
the first quarter to 2.7 percent from 2.9 in the fourth quarter
of 2008 in a positive sign for the listless U.S. housing
sector. []
"The slight improvement that we are seeing, in terms of
economic data along with a more positive reporting season, is
outweighing the potential risk of swine flu developing and
becoming more serious," said Henk Potts, equity strategist at
Barclays Stockbrokers.
U.S. crude oil futures for June delivery <CLc1> fell $2.00
to $49.55 a barrel. London Brent crude <LCOc1> was down $1.91
at $49.75 a barrel.
Gold edged lower as the dollar strengthened, but losses
were capped as fears of a flu pandemic helped underpin gold's
appeal as a hedge against risk.
Spot gold prices <XAU=> fell $4.55 to $907.55 an ounce.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 1.24 percent at 85.765.
The euro <EUR=> fell 1.34 percent at $1.3074. Against the
yen, the dollar <JPY=> fell 0.43 percent at 96.73.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
16/32 in price to yield 2.94 percent. The 2-year U.S. Treasury
note <US2YT=RR> gained 4/32 in price to yield 0.90 percent.
Asian stocks fell as the outbreak of swine flu in North
America hurt shares of airlines. The MSCI index of Asia-Pacific
stocks outside Japan <.MIAPJ0000PUS> dropped 1.8 percent but
Japan's Nikkei average <> bucked the trend to inch up 0.2
percent as drugmakers such as Chugai Pharmaceutical <4519.T>
jumped on an expected pick-up in flu drug sales.
(Reporting by Rodrigo Campos, Ellen Freilich and Nick Olivari
in New York and by Ian Chua, Atul Prakash, Jane Merriman and
Jan Harvey in London; Writing by Herbert Lash; Editing by James
Dalgleish)
