* U.S. stocks plunge in late-day drop on slowdown fears
* Dollar weakens vs yen after weak U.S. ISM services data
* Safe-haven bids for bonds rises after stock sell-off
* Oil slides on profit-taking after 10 percent surge
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Nov 5 (Reuters) - U.S. stocks dived and risk
aversion rose on Wednesday as the financial crisis sparked a
fresh round of bleak news and gave U.S. president-elect Barack
Obama a grim welcome a day after his historic election.
With Obama's victory less than 24 hours old, U.S. and
European equity markets tumbled and American and euro zone
government debt rose in a flight to safety after data from the
services sector pointed to a prolonged worldwide slowdown.
The three major U.S. equity indices all fell more than 5
percent, with the Dow pulled down the most by industrial icons
Exxon Mobil, Boeing and United Technologies.
Company reports underscored the daunting task Obama faces
when he takes office in January and tries to lead the United
States and the world out of the worst financial crisis since
the Great Depression.
"Even though there's a lot of enthusiasm and a lot of
excitement around the new president, I think it's going to be
very difficult for anything quick to happen," said Dean Barber,
president of investment firm Barber Financial Group in Kansas
City.
"Today we just had reality set in that," Barber said.
"We're still losing jobs and we still have consumer spending at
very low levels and we are heading into a holiday season that
looks like it could be one of the worst."
The Dow Jones industrial average <> closed down 486.01
points, or 5.05 percent, at 9,139.27. The Standard & Poor's 500
Index <.SPX> was down 52.98 points, or 5.27 percent, at 952.77.
The Nasdaq Composite Index <> was down 98.48 points, or
5.53 percent, at 1,681.64.
Finance company GMAC LLC reported a $2.52 billion loss in
the third quarter, hurt by slumping housing and auto markets,
and said its Residential Capital LLC mortgage unit may fail.
United Technologies Corp <UTX.N> said it stood by its 2008
profit forecast, though a strengthening dollar could put
results near the low end of the range.
United Technologies fell 6.2 percent.
In Europe a slew of bank results did little to lift a gloom
that has darkened on a recurring trend of falling profits and
rising provisions stemming from the deepening global crisis.
Euro zone service sector activity touched a fresh decade
low in October, a final index reading showed, while a U.S.
non-manufacturing report displayed weakness all around, with
employment at its lowest on record and new orders tumbling.
"The surveys continue to show record pessimism," Guillaume
Menuet, an economist at Merrill Lynch in London, said about the
European services data. "Sentiment has continued to deteriorate
and it's obviously bad news for the economy in the fourth
quarter."
European shares fell after six straight rising sessions as
commodity shares tracked sharp losses in oil and metal prices.
ArcelorMittal <MTP.PA><ISPA.AS>, the world's No. 1
steelmaker, forecast a weaker final quarter, slashed output and
froze growth plans in the face of a global slowdown.
Its shares fell almost 16 percent.
Commodity stocks were one of the biggest sectoral losers on
the index as crude oil prices fell about 6 percent, and copper,
zinc and nickel prices slipped by between 3.7 and 6 percent.
"Nothing immediately is going to change as a result of the
election victory. We still haven't broken the downtrends," said
Darren Winder, head of economics and strategy at Cazenove.
Oil dropped 7 percent to below $66 a barrel after a U.S.
government report showed fuel stockpiles growing as demand in
the world's top consumer continued to slow.
U.S. crude <CLc1> settled down $5.23 to $65.30 a barrel
while Brent crude <LCOc1> lost $4.57 to settle at $61.87 a
barrel.
Gold dropped 2 percent on tumbling oil and as Obama's
decisive win bolstered the dollar, dampening sentiment for
commodities across the board.
The December futures contract for gold <GCZ8> settled down
$14.90 at $742.40 an ounce in New York.
Treasuries rose late in the day after stocks slumped.
The benchmark 10-year U.S. Treasury note <US10YT=RR> gained
9/32 in price to yield 3.69 percent, and the 2-year U.S.
Treasury note <US2YT=RR> rose 1/32 in price to yield 1.36
percent.
The euro <EUR=> fell 0.62 percent at $1.2951, and against
the yen, the dollar <JPY=> fell 1.12 percent at 98.49.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 2.3 percent for a seventh consecutive
session, while Tokyo's Nikkei <> rose 4.5 percent.
(Reporting by Leah Schnurr, Nick Olivari and Chris Reese in
New York and Alex Lawler, Atul Prakash, Emelia Sithole-Matarise
and Jan Harvey in London; Writing by Herbert Lash; Editing by
Chizu Nomiyama)
