* Global shares lower ahead as euro output plunges, G8 eyed
* Oil, metals slide on profit-taking; stronger dollar
* Dollar aided by US bond rally, euro hit by production drop
By Mike Dolan and Sebastian Tong
LONDON, June 12 (Reuters) - World stocks, oil prices and the
euro fell on Friday after data showed euro zone industrial
output plunged again in April and as traders eyed a meeting of
finance ministers from the Group of Eight top economies.
Top-rated government bonds, which tend to benefit from
economic weakness and financial stress, also stabilised after a
torrid week. A successful auction of 30-year U.S. Treasury bonds
late on Thursday helped repair investor sentiment.
Although overall trading ranges remained narrow, the euro
zone production drop prompted the most significant moves of the
European session.
The European Union's statistics office said production fell
21.6 percent in the 16-country area, exceeding the previous
year-on-year record decline of 19.3 percent logged in March and
economists' expectations of a 20.2 percent drop.
Month-on-month, production fell 1.9 percent, far more than
the 0.4 percent dip expected by economists in a Reuters poll.
"The April industrial production data for the euro zone are
very disappointing and raise concern that the region is lagging
in terms of signs of the recession easing," said Howard Archer,
economist at IHS Global Insight.
The data contrasts with more optimistic signs from Japan,
where April output gained 5.9 percent month-on-month in the
biggest monthly rise for more than half a century, and from
China, where factory output rebounded more than expected in May.
"The euro zone economy will suffer, it will suffer more than
the rest of the world, ergo my view that the euro will
underperform for quite some time," said Maurice Pomery, managing
director at Strategic Alpha in London.
By 1130 GMT, the euro fell 0.7 percent to a low of $1.4000
<EUR=>, according to Reuters data.
European stocks suffered too. The pan-European FTSEurofirst
300 <> was down 0.4 percent at 884.52 points.
LandesBank Berlin strategists told clients: "The risk is
quite high that economic developments will not be able to keep
pace with the ambitious expectations."
"After the over 40 percent rise in share prices since early
March, further upside potential is limited."
The European retreats put a dampener on more buoyant Asian
trade, where the upbeat Chinese economic data had earlier lifted
regional shares to eight-month highs <.MIAPJ0000PUS> before they
eased back later. MSCI's world equity index <.MIWD00000PUS> was
down 0.36 percent by midsession in Europe.
Crude oil <CLc1> fell almost 1.5 percent [] as
investors were wary the doubling of prices since February had
overshot the recovery in the real economy.
"The risk of a massive price correction in the medium term
is building up," Commerzbank said in a note on oil prices.
G8 IN LECCE
Investors are cautious ahead of the meeting later in the day
of G8 finance ministers, who are expected to discuss so-called
"exit strategies" from their super-easy fiscal and monetary
policies if the recovery those policies were designed to trigger
finally takes hold.
The Wall Street Journal reported that U.S. Federal Reserve
officials are not likely to considerably increase purchases of
U.S. Treasuries and mortgage-backed securities when they meet in
late June. []
"We've been swinging back and forth quite a bit this week.
With the G8 in front of us, It may offer a good excuse not to
engage too heavily in the market at the moment," said Dag
Muller, technical analyst for currencies at SEB in Stockholm.
Emerging stocks <.MSCIEF>, which have outperformed their
global counterparts to rise nearly 40 percent this year, also
sagged 0.2 percent.
Bunds regained some lost ground as yields on benchmark
10-year U.S. Treasuries <US10YT=RR> backed down further from
eight-month highs hit earlier this week.
A solid auction of 30-year U.S. debt eased oversupply fears
and helped the September Bund futures <FGBLc1> rise 72 ticks.
"Risk aversion seems to be abating but people are still
sitting on their hands. We have had better data and the U.S.
Treasury auction was well received so that's given a bit of
relief ... but people are still a bit uncertain about putting on
too much risk," said a Nordic trader.
Emerging market spreads <11EMJ> were 7 basis points wider to
trade at 417 bps above Treasuries.
(Additional reporting by Peter Starck, Jan Strupczewski,
Naomi Tajitsu and Sujata Rao; editing by Stephen Nisbet)
