* MSCI world equity index drops 1.44 pct to 193.91
* European stocks fall 2.55 pct,emerging stocks down 2.8 pct
* Euro falls vs dollar, yen, euro zone PMI at record low
By Carolyn Cohn
LONDON, Feb 20 (Reuters) - World stocks fell to their lowest
since November on Friday, eyeing six-year lows, and the euro
dropped as concern about the global economy and the banking
sector drove investors towards government bonds and gold.
European stocks followed U.S. stocks lower after the Dow hit
a six-year low on Thursday on weak U.S. employment data and talk
of nationalisation of U.S. banks.
The euro zone February flash purchasing managers' index for
the dominant services sector hit a record low of 38.9 on Friday,
suggesting economic contraction in the euro zone in the first
quarter may be worse than the final months of 2008.
The level of exposure of western European banks to eastern
European economies is also weighing on European banking stocks
and the euro zone's currency.
"The focus on central and eastern Europe and worries that
private funding there is drying up is depressing the euro," said
BNP Paribas chief currency strategist Hans Redeker.
The MSCI world equity index <.MIWD00000PUS> dropped 1.44
percent to 193.91, its weakest since Nov 21.
The FTSEurofirst 300 index of leading European shares
<> fell 2.55 percent towards six-year lows, led by a
sell-off in banking stocks.
Benchmark emerging equities <.MSCIEF> dropped 2.8 percent to
one-month lows.
Data on Thursday showed U.S. workers drawing unemployment
aid jumped to a record at nearly 5 million, suggesting the
13-month-old U.S. recession is deepening.
Meanwhile, Japan's central bank said on Friday a
deterioration in corporate profits had gathered pace.
"The market is falling because it is getting in tune with
reality, it's a reflection of the deterioration in the global
economy and the impact that will have on earnings, which is why
this downturn has some way to go," said Peter Dixon, UK
economist at Commerzbank.
The euro dropped 0.6 percent against the dollar <EUR=> and
1.2 percent against the yen <EURJPY=>, while euro zone
government bonds <FGBLc1> rose 58 ticks.
Spot gold prices climbed slightly to $981.80 an ounce after
hitting $985.95 on Thursday, the highest since July. Analysts
say the $1,000 barrier will be breached soon.
Oil <CLc1> fell more than $1 towards $38 a barrel after
posting a 14 percent gain on Thursday, the biggest settlement
gain this year.
(Additional reporting by Jessica Mortimer and Simon Falush;
Editing by Andy Bruce)
