* Wall Street slips as high savings rate sparks concerns
* U.S. dollar slides on China comments on reserve currency
* Oil slips below $70 a barrel on Nigeria amnesty offer
* Bonds rise as weak equities enhance save-haven appeal
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, June 26 (Reuters) - Global shares slid on Friday
after a record U.S. savings rate sparked concerns it may erode
consumer spending and slow recovery, while the U.S. dollar fell
following China's call for a super-sovereign reserve currency.
The weakness in equity markets helped boost the allure of
fixed-income assets. U.S. Treasuries and euro zone government
debt prices rose, sending U.S. benchmark yields to their lowest
level in nearly four weeks, and Bund futures hit a one-month
high.
Crude oil prices fell more than $1, pressured by the
weakness on Wall Street and news that top African oil producer
Nigeria would halt fighting with rebels in its energy-rich
Niger Delta.
Data showed that while U.S. consumer spending and income
both rose in May as government stimulus spread through the
economy, much of the money was being socked away.
U.S. savings jumped to a record annual rate of $768.8
billion, the highest level since records began in 1959, and the
saving rate climbed to a more than 15-year high of 6.9 percent.
(See [])
"I don't think it is going to be any surprise that savings
have to come up, that the consumer has to deleverage," said
Henry Smith, chief investment officer of Haverford Trust Co in
Philadelphia. "This is not a short-term phenomenon. This is
going to play out over several years."
Smith said the savings rate is more data that shows "this
expansion will be characterized by a below-average, slower
expansion.
The Dow and S&P 500 slid even as a separate report showed
consumer sentiment rose in June to the highest reading since
February 2008 as hopes grew that the recession is abating.
[]
But the technology-heavy Nasdaq outperformed, helped by a
nearly 16 percent surge in shares of Palm Inc <PALM.O> after it
posted a narrower-than-expected loss Thursday and said demand
was strong for its new Pre smartphone. []
The Dow Jones industrial average <> closed down 34.01
points, or 0.40 percent, at 8,438.39. The Standard & Poor's 500
Index <.SPX> slid 1.36 points, or 0.15 percent, at 918.90. The
Nasdaq Composite Index <> rose 8.68 points, or 0.47
percent, at 1,838.22.
The CBOE Volatility Index <.VIX>, often called Wall
Street's fear gauge, fell to 25.93, its lowest close since
Sept. 12, just before the collapse of Lehman Brothers
precipitated enormous stock declines across the world.
European shares closed lower as drugmakers fell, led by
Sanofi-Aventis <SASY.PA>, while commodity-related shares
retreated as they tracked lower crude and metal prices.
The pan-European FTSEurofirst 300 <> index of top
shares closed down 0.1 percent at 844.59 points after initially
rising.
"Over the course of the day, sentiment has seemed to have
dissipated," said Peter Dixon, strategist at Commerzbank. "I
also think it is a bit of a reaction to the negative day in the
U.S. Investors just want to sell and take profits."
U.S. TREASURY DEBT GAINS
Bond investors shrugged off the personal income data and
focused instead on a tame reading of price pressures in the
same report, suggesting the Federal Reserve's super-easy
monetary policy has yet to spur inflation. []
Bonds also were still on a firm footing after this week's
record auction of $104 billion, calming worries over the
mounting U.S. debt.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
5/32 in price to yield 3.52 percent. The 2-year U.S. Treasury
note <US2YT=RR> was unchanged in price, yielding 1.11 percent.
Next week, the euro-zone market will see roughly 16 billion
euros of supply, which will be more than offset by redemption
payments amounting to around 24 billion euros, traders said.
The 10-year Bund yield <EU10YT=RR> was at 3.388 percent,
after earlier easing to a six-week low of 3.383 percent,
Reuters charts showed.
DOLLAR TUMBLES, OIL DROPS
China's central bank did not mention the U.S. dollar by
name but said it was a serious defect that one currency should
tower over all others. []
The sheer size of China's holdings of U.S. debt means such
remarks are likely to continue to put pressure on the dollar.
"The Chinese own a tremendous amount of U.S. Treasuries,"
said Fabian Eliasson, vice president of currency sales at
Mizuho Corporate Bank in New York. "They are obviously worried
about inflation and losing value on their investments."
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.70 percent at 79.842.
The euro <EUR=> was up 0.57 percent at $1.4065, while
against the yen the dollar <JPY=> was down 0.70 percent at
95.17.
An amnesty offer in Nigeria reversed early sharp gains in
the oil market, which followed a statement by Nigerian rebels
that they had blown up a wellhead in a Royal Dutch Shell
<RDSa.L> oilfield.
U.S. crude oil <CLc1> fell $1.07 to settle at $69.16 a
barrel. London Brent <LCOc1> fell 86 cents to $68.92 a barrel.
August gold futures <GCQ9> settled up $1.50 at $941 an
ounce in New York.
Asian shares rose as higher oil and metals prices boosted
resource stocks. MSCI's index of Asian stocks excluding Japan
<.MIAPJ0000PUS> climbed 1.9 percent but remains below
eight-month highs scaled at the start of June. Japan's Nikkei
average <> ended up 0.8 percent at 9,877.39.
(Reporting by Richard Valdmanis, Doris Frankel, Vivianne
Rodrigues, Burton Frierson in New York; Christopher Johnson,
Ian Chua and Joanne Frearson in London; Writing by Herbert
Lash; Editing by Leslie Adler)
