* U.S. stocks fall after weak consumer, housing data
* Flight-to-safety pushes U.S. dollar higher
* German business confidence drops unexpectedly
* Commodity prices slip on stronger greenback
(Updates with closing U.S. prices, comment)
By Daniel Bases
NEW YORK, Feb 23 (Reuters) - Shares fell across the globe
on Tuesday as falling U.S. consumer confidence and house prices
suggested the economy was still fragile, while German business
confidence dropped unexpectedly for the first time in almost a
year.
The yen rose against the dollar, while the dollar gained
against the euro as investors sought safety. The dollar's
strength dragged down commodities, pulling crude oil prices
from six-week highs to below $80 a barrel and left spot gold
prices weaker, hovering just above $1,100 an ounce.
Prices of U.S. Treasuries, a traditional safe-haven, shot
up as investors who had been preparing for declining prices
ahead of this week's Treasury auctions scrambled to cover their
positions. Solid demand for the $44 billion in two-year notes
auctioned helped to extend gains for U.S. Treasuries.
MSCI's All Country World stock index <.MIWD00000PUS> fell
1.09 percent from an earlier three-week high, and major indexes
in the United States and Europe all fell around 1 percent.
In the United States, consumer confidence slumped in
February to a 10-month low on concerns about business
conditions and the weak job market. []
"There's a bit of an adjustment process in terms of the
growth outlook as to what is going to be the major driver,"
said Nick Kalivas, vice president of financial research and
senior equity index analyst at MF Global in Chicago.
"The consumer does not look to be the major driver. It's
going to be more business-driven. Given the unease about the
consumer and the government sector, businesses may not be that
willing to do a lot of spending."
The closely watched Standard & Poor's/Case-Shiller indexes
added to the gloom on the economic outlook with a surprising
drop in December U.S. home prices, although the annual rate of
decline slowed. [] []
The Dow Jones industrial average <> slipped 100.97
points, or 0.97 percent, to 10,282.41. The Standard & Poor's
500 Index <.SPX> gave up 13.41 points, or 1.21 percent, at
1,094.60. The Nasdaq Composite Index <> was off 28.59
points, or 1.28 percent, to 2,213.44.
Stocks associated with a strong cyclical upturn in the
economy were hit. Top performers during last year's rally,
including technology, materials and energy stocks led the
downside.
Chipmaker Intel Corp <INTC.O> dropped 2.4 percent to $20.38
and the PHLX semiconductor index <.SOXX> lost 2.8 percent.
European shares were hurt both by the data on German
business sentiment and the U.S. data. The pan-European
FTSEurofirst 300 <> index closed down 1.13 percent at
1,011.62 points, with banks the worst performers.
EURO ZONE WOES
Germany's much watched Ifo business climate index fell as a
result of harsh winter weather that weighed on the construction
and retail sectors and hinted Europe's largest economy could
revert to contracting in the first quarter.
The Ifo institute's business climate index fell to a
reading of 95.2 in February, lower than forecasts for 96.1.
[]
And a Fitch Ratings credit downgrade of Greece's four
largest banks reminded investors of the fiscal problems in
Athens and the lack of clarity from the euro zone on how it
might aid one of its members. []
The U.S. dollar rose versus major currencies as measured by
the ICE Futures Exchanges's dollar index <.DXY>, which was up
0.53 percent at 80.936 from the prior session close of 80.507.
Against the yen, the dollar fell 0.98 percent to 90.23 yen
<JPY=>.
The euro <EUR=> at one point dropped below $1.35 before
edging back up to $1.3508, a loss of 0.65 percent on the day.
It traded just above a nine-month low against the greenback.
Sterling fell 0.45 percent to $1.5412 <GBP=> after Bank of
England chief Mervyn King said in parliamentary testimony that
the central bank could increase quantitative easing if the
economy worsens and the recovery remained fragile. The BoE
paused its 200 billion sterling asset buying program earlier
this month.
U.S. Treasury bond prices rose on the weak U.S. data. The
benchmark 10-year U.S. Treasury <US10YT=RR> rose 28/32 of a
point in price to yield 3.693 percent.
"Bonds made a rocket shot on this shocking, unexpected turn
of events in the consumer confidence data," said Chris Rupkey,
chief financial economist at Bank of Tokyo/Mitsubishi UFJ in
New York.
The Treasury's two-year note auction had investors eager
to sop up the shorter-dated debt in their hunt for lower risk
assets. The Treasury will sell $42 billion of five-year notes
on Wednesday.
Also on Wednesday, Federal Reserve Chairman Ben Bernanke
will testify to Congress on the central bank's stimulus exit
strategies, though speculation of a near-term rise in U.S.
interest rates stemming from the U.S. central bank's hike in
the discount rate last week has cooled.
In Europe, German two-year government bond yields touched a
euro-lifetime low of 0.906 percent <EU2YT=RR>.
U.S. light sweet crude oil <CLc1> fell $1.45, or 1.81
percent, to settle at $78.86 per barrel, and spot gold prices
<XAU=> lost $12.25, or 1.10 percent, to $1,101 an ounce.
(Additional reporting by Lynn Adler, Luciana Lopez, Steven C.
Johnson, Rodrigo Campos, Ellen Freilich, Leah Schnurr in New
York; Tamawa Desai, Atul Prakash and Jessica Mortimer in
London; Paul Carrel in Berlin; Editing by Leslie Adler)
