* 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 close)
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 dollar scored its best day in more than two months
against the euro, bolstered by a growing view that the European
Central Bank may be the next to purchase its own bonds to
stimulate growth.
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.
Wall Street capped a strong week on a down note as
investors booked profits in the wake of the recent surge, and
bank shares dropped after bank executives indicated March had
been a tougher month than the previous two.
After a meeting with President Barack Obama, the chief
executives of JPMorgan Chase & Co's <JPM.N> and Bank of America
Corp's <BAC.N> poured cold water on investor hopes for a
rebound in the first quarter.
"Given that's kind of where this rally started in the
second week of the month with Citigroup and Bank of America
indicating they had a good first two months, it would make
sense that his comments would have a negative impact," said
Peter Jankovskis, director of research at OakBrook Investments
LLC in Lisle, Illinois, referring to JPMorgan chief executive
Jamie Dimon.
The Dow Jones industrial average <> fell 148.38 points,
or 1.87 percent, to 7,776.18 while the Standard & Poor's 500
Index <.SPX> sank 16.92 points, or 2.03 percent, to 815.94. The
Nasdaq Composite Index <> slid 41.80 points, or 2.63
percent, to 1,545.20.
For the week, the Dow jumped 6.8 percent, the S&P 500
surged 6.2 pct and the Nasdaq added 6 percent.
The MSCI world equity index <.MIWD00000PUS> was down 2
percent at the end of trading in New York, but was still about
20 percent above the lows it reached earlier this month.
European shares ended down 1.1 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.
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 1.77 percent to $1.3293 from a
previous session close of $1.3532. Against the Japanese yen,
the dollar <JPY=> fell 0.84 percent to 97.91 from a previous
session close of 98.740.
CRUDE PRESSURED
In energy and commodities prices, May crude <CLK9> fell
3.61 percent to close at $52.38. The Reuters/Jefferies CRB
Index <.CRB> was down 5.42 points, or 2.38 percent, at 222.26.
The dollar's strength 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 the fixed income markets, prices for 30-year U.S.
Treasury debt rose as traders made more bullish bets in hopes
of profiting from the Federal Reserve's planned purchases of
long-dated government securities.
But other maturities ended flat to lower, as traders booked
earlier gains tied to the Fed's $7.5 billion purchase of debt
maturing in the next two to three years.
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 30-year long bond <US30YT=RR> rose 28/32, with the
yield at 3.608 percent.
"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."
