* Investors favor Treasuries on first day of new quarter
* Dollar up on safe-haven bid, EU's Almunia remarks
* MSCI off 1.9 pct over doubts of solid US recovery
(Updates with U.S. markets and news on nation-wide
manufacturing activity, changes byline, dateline; previous
LONDON)
By Jennifer Ablan
NEW YORK, Oct 1 (Reuters) - Investors worldwide moved out
of stocks and into the relative safety of assets such as
Treasuries and the dollar on Thursday after fresh concerns
emerged over the strength of the U.S. economic recovery.
World stocks saw heavy selling pressure following news that
a survey of manufacturing activity across the United States
dipped slightly in September while the number of U.S. workers
filing new claims for jobless benefits increased more than most
economists had predicted.
The MSCI world equity index <.MIWD00000PUS> slid 1.9
percent, kicking off October on a sour note after soaring 17
percent in the third quarter which ended Wednesday.
Meanwhile, the Dow Jones industrial average <> dropped
63.11 points, or 0.65 percent, to 9,649.17 while the Standard &
Poor's 500 Index <.SPX> fell 8.26 points, or 0.78 percent, to
1,048.82.
The biggest loser, however, was the Nasdaq Composite Index
<>, which lost 19.81 points, or 0.93 percent, to
2,102.61.
Money managers and hedge funds are bracing for more down
days.
"At the risk of being the boy who cried wolf, I believe
that market participants have a false sense of security in
rising equity share prices," said Doug Kass, founder and
president at hedge fund Seabreeze Partners Management in Palm
Beach, Florida.
Kass argues there continues to be "tentative signs" in
housing, automobiles, manufacturing surveys such as Thursday's
national reading and other economic indicators that the month
of September was weaker than generally expected. For story, see
[]
Energy stocks followed equity markets lower as U.S. light
sweet crude oil <CLc1> retreated 62 cents, or 0.88 percent, to
$69.95 per barrel.
The Reuters/Jefferies CRB Index <.CRB> was down 3.64
points, or 1.41 percent, at 255.75.
Investors' favorite haven, Treasuries and the greenback,
benefited from the global move away from stocks.
The U.S. benchmark 10-year Treasury note <US10YT=RR> was up
21/32 in price, with the yield at 3.2282 percent, while the
2-year U.S. Treasury note <US2YT=RR> was up 3/32, yielding
0.897 percent.
At the longer end of the yield curve, the 30-year U.S.
Treasury bond <US30YT=RR> was up 1-5/32, with the yield at
3.9853 percent.
DOLLAR GAINS OVER DOUBTS ON RECOVERY
The dollar rose against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> up 0.59 percent
at 77.102 from a previous session close of 76.653.
The greenback got a whiff of the flight-to-quality bid on
doubts over the potency of the US economic recovery sparked by
releases including the latest weaker job figures.
Comments by a top European official about the euro's recent
gains hurt the single currency.
Traders focused on remarks made by Joaquin Almunia, the
European Union's economic and monetary affairs commissioner,
who said euro strength would be discussed when Group of Seven
officials meet in Istanbul at the weekend. []
The euro <EUR=> was down 0.63 percent at $1.4543 from a
previous session close of $1.4635. Against the Japanese yen,
the dollar <JPY=> was off 0.03 percent at 89.72 from a previous
session close of 89.750.
