* Stocks fall, MSCI world index down 0.9 pct
* Wal-Mart, other US retailers warn after weak December
* Metal, oil prices drop
* Sterling rises after BoE cuts benchmark rate
By Vivianne Rodrigues
NEW YORK, Jan 8 (Reuters) - Stocks markets and oil prices
fell broadly on Thursday after bleak economic data and a dim
outlook from the world's largest retailer heightened fears of a
prolonged global recession.
The dollar weakened while bonds and gold rose after
Wal-Mart Stores Inc <WMT.N> indicated that U.S. consumer
spending, which accounts for about two-thirds of the activity
in the world's largest economy, continues to falter amid
mounting unemployment and dwindling savings.
Shares in the company slid 9 percent earlier after it cut
its profit forecast for its fourth quarter and said sales were
weaker than Wall Street estimates. For details, see
ID:[].
The drop in Wal-Mart shares weighed on U.S. blue chips and
on other retailing and consumer-oriented stocks world-wide.
The pound rose to a three-week high against the dollar
after the Bank of England cut its benchmark interest rate less
aggressively than some had expected.
The bank cut the rate to a record low of 1.5 percent to
prevent the credit squeeze from further slowing the economy.
British interest rates have now fallen by 3.5 percentage points
since October and some analysts believe the central bank will
soon follow the U.S. Federal Reserve and The Bank of Japan in
bringing borrowing costs close to zero. []
"Only a few weeks ago the consensus market call was for a
full 100 basis point cut, so given today's more modest response
the news can be viewed as victory for pound bulls," said Boris
Schlossberg, director of currency research at GFT in New York.
The pound rose as high as $1.5372 <GBP=>, according to
Reuters data and last traded at $1.5190, up 0.5 percent on the
day. The euro earlier hit a low of 88.81 pence <EURGBP=D4>, its
lowest since mid-December but it recovered some of its losses
against the pound.
The dollar slipped more than 1.5 percent against the yen
<JPY=> to 91.05 yen as falling share prices sapped demand for
risky investments.
The euro <EUR=> fell on weak economic reports in Europe but
rebounded on grim U.S. data and was up 0.5 percent to $1.3670.
Reports showed economic sentiment in the euro zone plunged
to record lows in December and inflation expectations tumbled.
The data strengthened the case for another European Central
Bank rate cut when it meets next week [].
Weekly jobless claims in the U.S. unexpectedly fell last
week to their lowest level since Mid-October, a government
report showed, but the number of those remaining on jobless
rolls rose to a 26-year high. []
"You are still seeing a lot of people collecting
unemployment claims so the underlying conditions are very
poor," said Pierre Ellis, senior global economist at Decision
Economics Inc in New York. "The bad news in the continuing
claims is relentless."
Markets got little respite from an announcement by U.S.
President-elect Barack Obama on Thursday that he would offer
working families a $1,000 tax cut and improve energy efficiency
in millions of American homes in order to create jobs and
stimulate the economy. []
Global stocks as measured by the MSCI world index
<.MIWD00000PUS> lost 0.9 percent, with the pan-European
FTSEurofirst 300 <> shedding 0.8 percent and Tokyo's
Nikkei average <> down 3.9 percent.
In Wall Street, The Dow Jones industrial average <>
fell 1 percent and The Standard & Poor's 500 Index <.SPX> shed
0.6 percent.
INVESTORS SELL OIL, METALS
Oil prices <CLc1> fell 1 percent to $41.5 a barrel even as
violence in the Middle East, a recent driven of prices,
escalated. Several rockets fired from Lebanon struck northern
Israel on Thursday, slightly wounding two police, in an attack
seen as linked to Israel's war on Hamas Islamists in the Gaza
strip.
Government bonds in the U.S. and Europe mostly rose in a
safe-haven bid but gains were limited however by concerns over
the impact of a wave of new debt supply.
"As we hear more about the plans for fiscal stimulus,
participants are saying that is going to mean a lot more supply
on the market," said David Dietze, chief investment strategist
at Point View Financial Services in Summit, New Jersey.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> were
trading 6/32 higher in price for a yield of 2.47 percent. The
10-year Bund <EU10YT=RR> yields fell slightly to 3.12 percent.
Metal prices headed south on concerns over demand in a
tough economic environment. Copper prices eased and nickel fell
almost 7 percent.
Gold prices rose as the dollar weakened. Gold for February
delivery <GCG9> rose 1.5 percent or $13 to $854.70.
(Additional reporting by Ellis Mnyandu, Gertrude Chavez and
Chris Reese in New York and Dominic Lau in London; Editing by
Tom Hals)
