GLOBAL MARKETS-World stocks fall on US data, dollar gains

                                

                                
 * World stocks weaken after US data
                                
 * Gold rises to record highs on safe-haven bid
                                
 * FX intervention fears continue
 (Updates with U.S. open, changes byline, dateline, previous
LONDON)
                                
 By Manuela Badawy
                                
 NEW YORK, Sept 16 (Reuters) - World stocks fell on Thursday
as data showed the U.S. economy's recovery remained tepid,
while the dollar rose to a session high against the yen a day
after Japan's huge intervention to weaken its currency.
                                
 U.S. government bond prices fell after Philadelphia Federal
Reserve data suggested slower business contraction in the U.S.
Mid-Atlantic region, while U.S. claims for unemployment
benefits dropped to a two-month low but still remained high.
                                
 Gold rose to a record high above $1,275 per ounce as
jitters about any further Japan yen selling and broader
economic uncertainty enticed more investors to the safe-haven
commodity.
                                
 "We've had a lot of negative things thrown at market this
morning, and it's battling back against a lot of economic and
other fundamental negative news. Volumes are extremely light,"
said Tom Schrader, managing director, U.S. Equity Trading at
Stifel Nicolaus Capital Markets in  Baltimore.
                                
 The Dow Jones industrial average <.DJI> was down 11.73
points, or 0.11 percent, at 10,561.00. The Standard & Poor's
500 Index  <.SPX> was down 3.16 points, or 0.28 percent, at
1,121.91. The Nasdaq Composite Index  <.IXIC> was down 4.65
points, or 0.20 percent, at 2,296.67.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
fell 0.8 percent as weak British retail sales data added to
investor worries about the economy following disappointing U.S.
numbers in the previous session. The share index is up about 5
percent in September but off about 3 percent from its April
peak.
                                
 MSCI's All-Country World Index <.MIWD00000PUS> was down
0.33 percent, while Tokyo's benchmark Nikkei stock index
<.N225> ended down 0.07 percent.
                                
 YEN TALK
                                
 Investors were still coming to terms with Wednesday's
currency intervention by Japan, its first in six years. The
Bank of Japan's money market data showed the yen-selling
intervention may have totaled around 1.76 trillion to 1.86
trillion yen ($20.52-21.69 billion). [ID:nTKW007123]
                                
 Adding to investor nerves, Japanese Prime Minister Naoto
Kan pointed to more potential yen selling.
                                
 The dollar reached as high as 85.84 yen <JPY=> on
electronic trading platform EBS. It was last up 0.1 percent at
85.79 yen.
                                
 "There's no sign of the Bank of Japan this morning yet on
markets, but they were successful yesterday and we are
beginning to see some funds moving in the same direction,
unwinding long yen positions," said Greg Salvaggio, vice
president of trading at Tempus Consulting in Washington.
                                
 Wednesday's move was designed to protect Japanese exports
from a too-competitive exchange rate and ward off job losses.
Some market players may be willing to test Japan's resolve, but
there was little indication on Thursday.
                                
 The euro rose to its highest in more than a month against
the dollar <EUR=> to $1,3112 and the yen <EURJPY=> to 112.24
after strong demand at a Spanish bond auction reinforced
confidence in Europe's sovereign issues.
                                
 The Swiss franc weakened broadly after the Swiss National
Bank kept interest rates unchanged as expected and forecast a
slowdown in economic growth because of strength in the
currency. [ID:nWEA8411]
                                
 Spain sold a combined 4 billion euros in 10-year and
30-year bonds, at the top of its targeted range, attracting
solid demand and lower yields than its last auction in June.
[ID:nLDE68E0YT]
                                
 The country was among those most in the limelight during
the sovereign debt crisis earlier this year.
                                
 BONDS AND COMMODITIES
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 12/32, with the yield at 2.7645 percent after data showed
slower business contraction in the U.S. Mid-Atlantic region.
                                
 The 2-year U.S. Treasury note <US2YT=RR> was up /32, with
the yield at 0.4796 percent. The 30-year U.S. Treasury bond
<US30YT=RR> was down 30/32, with the yield at 3.9293 percent.
                                
 In energy and commodities prices, crude oil <CLc1> fell 74
cents, or 0.97 percent, to  $75.28 per barrel, and spot gold
prices <XAU=> rose $8.90, or 0.70 percent, to $1276.40.
Earlier on Thursday it hit a record $1,277.70 an ounce. U.S.
December gold futures also rose to a historic high <GCZ0>.
 (Additional reporting by Wanfeng Zhou and Richard Leong in New
York and Jeremy Gaunt in London; Editing by Padraic Cassidy)