* Global stocks decline as bleak economic news flow resumes
* Euro zone services activity falls to record low
* 30-year euro zone bond yield hits historic low
* Central banks expected to cut rates aggressively
(Updates prices, adds Wall Street preview)
By Ian Chua
LONDON, Dec 3 (Reuters) - A darkening outlook for the euro
zone economy clipped global stocks on Wednesday and helped send
the 30-year euro zone government bond yield to an historic low
as investors looked for aggressive interest rate cuts in Europe
this week.
Wall Street was set to track European bourses lower with
U.S. stock index futures <NDc1><SPc1><DJc1> all in the red.
The euro stayed on the back foot a day before the European
Central Bank, Bank of England and Sweden's Riksbank are all
widely expected to cut borrowing costs.
Supporting those expectations, economic reports on Wednesday
showed the euro zone's services economy fell deeper into
recession in November than initially thought and inflationary
pressures eased.
(For details please double click on [])
"This is a horrible survey across the board, showing that
the euro zone service sector is being hit ever harder by the
financial crisis, muted consumer spending and markedly weaker
activity in key export markets," said Howard Archer, economist
at IHS Global Insight.
A separate report revealed that retail sales in the region
dropped by a worse-than-expected 0.8 percent in October from the
previous month.
The FTSEurofirst 300 <> index of top European shares
fell 0.6 percent with Britain's FTSE 100 index <> down 0.1
percent and Germany's DAX <> shedding 1.0 percent.
MSCI world equity index <.MIWD00000PUS> eased 0.2 percent.
Earlier, Japan's Nikkei <> managed to eke out a 1.8
percent gain following a rebound on Wall Street on Tuesday, and
MSCI's index of other Asian stock markets <.MIAPJ0000PUS> put on
just 0.4 percent.
The news flow in Asia was negative too with Australia's
economy growing at its slowest pace in eight years in the third
quarter.
Thailand slashed rates by 100 basis points and South Korea
took steps to help local banks through a cash crunch. See
[]
Central banks worldwide are cutting rates to fight
recession. They are also considering more measures to stabilise
financial markets and restore battered consumer and investor
confidence, including help for struggling U.S. auto makers.
The ECB meets on Thursday and most economists expect an
interest rate cut of 50 basis points, while the Bank of England
is forecast to cut rates by an aggressive 100 basis points.
Sweden's central bank is likely to slash rates by a record
100 basis points, or possibly more, on Thursday when it
announces the result of its meeting, which it brought forward by
almost two weeks.
EURO PRESSURED AS ECB CUT EYED
Also under pressure, the euro fell 0.5 percent against the
dollar on the day to $1.2643 and was also weaker against the yen
<EURJPY=>, while the dollar climbed 0.5 percent against a basket
of major currencies <.DXY>. The yen was also broadly firmer.
"The slew of dour fundamental data has raised expectations
that the ECB will cut rates by more than the consensus forecast
of 50 basis points, which could lead to the euro breaking from
its current range," said John Rivera, currency analyst at Forex
Capital Markets in a research note.
"The single currency has traded between $1.2400 and $1.3000
since late October and it may take an aggressive move from the
central bank to sink it below support."
U.S. and euro zone bond yields were mostly higher on the
day, reversing an early move lower, but yields have been
trending down as demand for less risk assets mounted.
The 30-year euro zone government bond yield <EU30YT=RR>
plumbed 3.319 percent earlier, a record low according to Calyon,
before returning to 3.407 percent, while the 10-year euro zone
bond yield <EU10YT=RR> hit a 3-year low of 3.004 percent, before
edging up to 3.101 percent.
The benchmark 10-year U.S. Treasury note yield <US10YT=RR>
rose 4 basis points on the day to 2.746 percent, but held near a
five-decade low of around 2.65 percent set on Monday.
Oil steadied near $47 a barrel after touching a 3-1/2 year
low of $46.82 on Tuesday but stayed on shaky grounds given the
risk that weekly data due out later in the session could show
further signs of weakening U.S. oil demand.
Gold <XAU=> slipped towards $774 an ounce, down from $781.50
late in New York on Tuesday as a firmer dollar against the euro
dented the metal's appeal as a currency hedge.
(Additional reporting by Rafael Nam in HONG KONG; Editing by
Victoria Main)
