GLOBAL MARKETS-World stocks slide on economic data, oil slips

                                
 * World stocks slump anew on economic data, financial fear
                                
 * Dollar, government debt gain in revived safe-haven bids
                                
 * Oil slides, economic data raises fear of deeper slowdown
                                
 (Recasts with U.S. markets, changes dateline; previous
LONDON)
                                
 By Herbert Lash
                                
 NEW YORK, March 5 (Reuters) - World stocks careened lower
on Thursday as a dismal forecast for euro zone growth and
renewed worries about banks dragged down equities and boosted
the safe-haven appeal of the dollar and government debt.
                                
 Oil fell more than 2 percent toward $44 a barrel as the
deteriorating economic outlook heightened expectations that
fuel consumption would shrink further. For details, see
[ID:nSP418371]
                                
 The dollar rose against the euro and sterling after the
European Central Bank and Bank of England cut borrowing costs
to record lows. But the dollar fell versus the yen after it had
earlier touched a four-month high near 100 yen.
[ID:nN05321064]
                                
 Government bonds surged, with shorter-dated debt yields in
the euro zone briefly touching their lowest level since the
euro's launch after the ECB cut rates to 1.5 percent and
signaled more reductions were possible. [ID:nL5598944]
                                
 Grim economic data signaled more fallout from recessions
around the world and added to investors' gloomy mood. The major
U.S. indexes traded around 12-year lows while a key index of
leading European shares set a fresh lifetime closing low.
                                
 Worries about the financial system's health hit bank stocks
again and investors fretted about the possibility that the
embattled finance arm of General Electric <GE.N>  could lead to
a ratings downgrade for the entire company.
                                
 In another setback for American corporate icons, auditors
for General Motors <GM.N> warned the once-mighty U.S. carmaker
may not survive the crisis. GM's stock fell about 17 percent.
                                
 GE shares only slid 0.6 percent but financial shares
tumbled, with the S&P financial index <.GSPF> falling 8.1
percent as Citigroup <C.N> sank below $1, calling into question
its inclusion in the Dow Jones industrial average <.DJI>.
                                
 Dow Jones Indexes, creator of the iconic U.S. stock index,
said it was watching the bank's situation closely.
                                
 After 1 p.m., the Dow Jones industrial average <.DJI> fell
206.05 points, or 3.00 percent, at 6,669.79. The Standard &
Poor's 500 Index <.SPX> slipped 23.79 points, or 3.34 percent,
at 689.08. The Nasdaq Composite Index <.IXIC> shed 38.21
points, or 2.82 percent, at 1,315.53.
                                
 Financial shares also dragged European stocks lower after
staff at the European Central Bank forecast the euro zone's
economy could shrink by as much as 3.2 percent this year,
reigniting fears of a deeper recession.
[ID:nL5616972][ECILT/EU]
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed down 3.7 percent to a record low of 670.72 points.
                                
 The rout in Europe almost wiped out Wednesday's gains,
driven by hopes for an economic recovery in China.
                                
 "What we see today is a sobering of the markets," said
Hans-Juergen Delp, equity market strategist at Commerzbank in
Frankfurt.
                                
 "Yesterday, we had euphoria that was solely due to China,
but this can't be the cure to the crisis. The ECB's projection
about the European economy is nothing more than blank
realism."
                                
 Insurer Old Mutual <OML.L> fell 13.1 percent and British
Life insurer Aviva <AV.L> plunged 33.4 percent.
                                
 The European Union's statistics office confirmed that gross
domestic product in the fourth quarter shrank by the deepest
ever quarterly drop in the euro zone. [ID:nL5880710]
                                
 The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.56 percent at 88.983. Against
the yen, the dollar <JPY=> fell 0.79 percent at 98.30.
                                
 The euro <EUR=> fell 0.59 percent at $1.256.
                                
 Government bonds rose as investors shifted out of riskier
assets. The benchmark 10-year U.S. Treasury note <US10YT=RR>
gained 41/32 in price to yield 2.83 percent, and the 2-year
U.S. Treasury note <US2YT=RR> rose 2/32 in price to yield 0.91
percent.
                                
 U.S. light sweet crude oil <CLc1> fell $1.12 to $44.26 a
barrel.
                                
 Spot gold prices <XAU=> rose $18.90 to $925.75 an ounce.
                                
 Japan's Nikkei average <.N225> surged 2 percent on hopes
that tentative signs of a Chinese rebound would boost exports.
The MSCI index for Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> was down 0.2 percent.
 (Reporting by Edward Krudy, John Parry, Steven C. Johnson in
London and Emelia Sithole-Matarise and David Sheppard in
London, Christoph Steitz in Frankfurt; writing by Herbert Lash;
Editing by Kenneth Barry)