* Wall Street falls as profit-taking sets in
* MSCI world equity index eases after recent run-up
* Euro falls, dollar up on German finmin warning
* Oil backs down from 2009 high on profit-taking
(Updates with New York trade; changes byline, dateline,
previous LONDON)
By Burton Frierson
NEW YORK, March 27 (Reuters) - Stock prices fell around the
globe on Friday as investors decided to take the money and run
after a stunning 20-percent rally from lows earlier this month,
while political strains punished the euro.
The euro suffered its biggest one-day loss against the
dollar in more than two months after Germany's finance minister
said fiscal irresponsibility in Europe could put the currency
at risk.
A stronger dollar hurt oil and gold. As has often been the
case since the start of the economic crisis, the rising dollar
also coincided with weakening stocks.
Profit-taking explained much of the slide in New York,
Europe and Tokyo in the wake of what many suspect was just a
bear-market rally. Whatever the case, the stock market may be
in for a period of reassessment.
"After the significant rallies, you will see these types of
pullbacks," said David Sowerby, market strategist for Loomis
Sayles in Detroit. "There remains significant macro uncertainty
on consumer spending although the micro news has gotten
marginally better."
In early afternoon trading, the Dow Jones industrial
average <> was down 110.87 points, or 1.40 percent, at
7,813.69. The Standard & Poor's 500 Index <.SPX> was off 11.16
points, or 1.34 percent, at 821.70. The Nasdaq Composite Index
<> was down 25.87 points, or 1.63 percent, at 1,561.13.
The MSCI world equity index <.MIWD00000PUS> had lost 1.73
percent by midday in New York.
European shares were down about 1 percent <>.
Despite slight losses on the day, Japan's Topix index
posted its biggest weekly gain since 1997 and the Nikkei
average touched its highest point in more than two months on
Friday.
The benchmark Nikkei <> ended down 0.1 percent, or
9.36 points, at 8,626.97 after climbing as high as 8,843.18,
its highest since Jan. 9.
German Finance Minister Peer Steinbrueck told the German
parliament that the euro was at risk if the European Union's
Stability and Growth Pact, which governs the region's rules on
budget deficits, is not taken seriously. For details, see
[]
"Germany has a very direct impact on how the euro
performs," said Fabian Eliasson, vice president of foreign
exchange sales at Mizuho Corporate Bank in New York. But the
longer term impact "is hard to gauge until you see how other
countries react."
The euro <EUR=> slid 1.76 percent to $1.3294 from a
previous session close of $1.3532. Against the Japanese yen
<JPY=>, the dollar was down 0.54 percent at 98.21 yen from a
previous session close of 98.740.
CRUDE PRESSURED
In energy and commodities prices, U.S. light sweet crude
oil <CLc1> fell $2.46, or 4.5 percent, to $51.88 per barrel,
and spot gold prices <XAU=> fell $10.25, or 1.1 percent, to
$922.80. The Reuters/Jefferies CRB Index <.CRB> was down 4.39
points, or 1.93 percent, at 223.29.
A stronger dollar against the euro and easing stock markets
helped pressure crude, along with a consultancy report of OPEC
producing over the group's output target in March.
In fixed-income markets, U.S. Treasury debt prices rose for
a second day as traders raised their bullish bets in hopes of
profiting from the Federal Reserve's purchases of government
securities.
The Fed has embarked on a program to buy up to $300 billion
over the next six months in an effort to ease credit conditions
throughout the world's largest economy.
On Friday, the Fed bought $7.5 billion in Treasuries
maturing in the next two to three years, matching the amount of
intermediate issues in its debut purchases on Wednesday.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
6/32, with the yield at 2.7208 percent.
The 30-year long bond <US30YT=RR> was up a full point on
the day, with the yield at 3.602 percent, as traders piled up
bullish bets ahead of the Fed's purchase of long-dated debt on
Monday.
"The mantra of 'Buy what the government buys' has
infiltrated the market," said Richard Schlanger, portfolio
manager with Pioneer Investments USA in Boston. "People are
trying to get ahead of the Fed."
