* Global stocks slide on fear U.S. rescue plans not enough
* Dollar, most govt bonds rise on flight-to-safety buying
* Gold hits record highs in sterling terms, Indian futures
* Oil prices slip on overhang in U.S. crude inventories
(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, Feb 12 (Reuters) - Widespread fears that U.S.
efforts to revive the economy and stabilize banks may prove
insufficient drove investors into safe havens like gold and
bonds on Thursday, and pushed world stock markets lower.
More bleak economic data from Asia and Europe that pointed
to deflation in Japan and record plunges in industrial
production in the euro zone added to market unease sparked by
the lack of details in U.S. rescue plans announced on Tuesday.
Concerns over the health of the global economy dragged U.S.
oil futures to a three-week low below $35 a barrel and cut
two-year yields on euro zone government debt to their lowest
since the euro began circulating in 1999.
Safe haven buying marked trading across all asset classes,
lifting the dollar higher against most currencies and pushing
gold prices to new highs in Britain and India. A slide in
equity markets also was a catalyst in the flight to safety.
"Risk aversion has returned to the market with full force,"
said Ole Hansen, senior manager with Saxo Bank in Copenhagen.
"That makes people seek out safe havens, which is reflected not
only in the inflows into gold but also the bonds market."
Gold priced in sterling <XAUGBP=> and gold futures in India
<MAUc1> hit all-time highs, adding to record highs on Wednesday
for bullion in euro, Canadian dollar and Swiss franc terms.
Sliding stock prices have helped bolster gold as investors
move out of equities, a risky asset class, in favour of
bullion, Hansen said.
Before 1 p.m., the Dow Jones industrial average <> was
down 115.09 points, or 1.45 percent, at 7,824.44. The Standard
& Poor's 500 Index <.SPX> was down 10.78 points, or 1.29
percent, at 822.96. The Nasdaq Composite Index <> was down
4.40 points, or 0.29 percent, at 1,526.10.
Uncertainty about the economy fueled selling across a broad
range of sectors in U.S. equity markets, including energy,
which buckled as crude oil prices slid.
Chevron <CVX.N> declined almost 2 percent while Exxon Mobil
<XOM.N> pared losses, down just 0.7 percent.
Sales at U.S. retailers rebounded in January, government
data showed, likely boosted by post-holiday discounts. But
economists said retail data are volatile and should not be
taken as a sign that the decline in sales has bottomed.
U.S. jobless claims data also showed no signs of relief.
"No one believes the retail sales data and everyone fears
the trend of initial jobless claims will just continue to rise
and rise and put more and more pressure on the psyche of
consumers, which is already pretty fragile," said Jeffrey
Kleintop, chief market strategist at LPL Financial in Boston.
Financial shares also dragged on the broader market. The
KBW Bank index <.BKX> fell almost 6 percent due to persistent
worry about a lack of clarity over how the Obama administration
will cleanse troubled assets from banks' books.
In Europe banks also were hit by doubts about the U.S.
government's plan to rescue the financial system.
The pan-European FTSEurofirst 300 index <> ended down
1.5 percent at 791.69 points.
BNP Paribas <BNPP.PA> lost 5.5 percent and UBS <UBSN.VX>
fell 3.8 percent.
Capgemini <CAPP.PA> topped the losers. Europe's largest
computer consultancy sank 9.1 percent after warning the global
economic slump would eat into sales and margins in the first
half of this year.
U.S. Treasury debt prices were bolstered as investors
fretted over government rescue plans for the financial
industry. But gains were limited and prices lost ground,
especially the 30-year long bonds, following weak demand at an
auction of the securities.
"The safe-haven (bid) for Treasuries continues to exist,"
said Mary Ann Hurley, vice president of fixed-income trading at
D.A. Davidson & Co in Seattle. But, she said "supply is a huge
thing, there is absolutely no way of getting around it."
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 1/32 in price to yield 2.80 percent. The 2-year U.S.
Treasury note <US2YT=RR> was slightly up in price to yield 0.91
percent.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.52 percent at 86.291. Against
the yen, the dollar <JPY=> gained 0.18 percent at 90.59.
The euro <EUR=> fell 0.57 percent at $1.2822.
Oil losses come on the heels of a U.S. government report on
Wednesday that showed a seventh straight weekly increase in
nationwide crude inventories. U.S. light sweet crude oil <CLc1>
fell 58 cents to $35.36 a barrel.
Spot gold prices <XAU=> rose $8.75 to $946.90 an ounce.
Overnight in Asia, Japanese stocks fell early and never
looked back, with the Nikkei share average <> off 3
percent. The MSCI index of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> fell for a third day, down 1.4 percent.
(Reporting by Ellis Mnyandu, Chris Reese, Richard Valdmanis,
Gertrude Chavez-Dreyfuss in New York; Rebekah Curtis, George
Matlock, Jan Harvey in London; writing by Herbert Lash, Editing
by Chizu Nomiyama)
