* Europe stocks close at 6-year low, US stocks mostly down
* Longer-dated government bonds slammed by supply worries
* Oil slips as European, British data confirm recessions
* Dollar climbs to 23-year high vs sterling amid weak data
(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, Jan 23 (Reuters) - A raft of weak economic data
in Europe lifted the dollar to a six-week high against the euro
on Friday and knocked European stocks to a six-year low, while
U.S. stocks were mixed after the previous session's sharp
losses.
Weak corporate earnings and jitters over the year's outlook
put a damper on U.S. stocks. Technology shares darted in and
out of positive territory on results at Internet leader Google
<GOOG.O> that beat expectations and the S&P 500 turned higher.
Longer-dated U.S. and euro zone government bonds fell on
the looming impact of large amounts of new debt to fund the
U.S. government's expected economic rescue plans.
The yield on the 30-year U.S. Treasury bond was poised for
its biggest weekly gain in more than 26 years due to supply
concerns, as well as U.S. criticism this week about the
currency policies of China, the largest foreign holder of
Treasuries.
Gloomy economic data underpinned shorter-term debt in
Europe as investors bet on further interest rate cuts by the
European Central Bank. The two-year euro zone government bond
yield plumbed to a record low of 1.348 percent at one stage.
With no major U.S. data scheduled, investors took their cue
from dismal data coming out of Europe.
The British economy entered recession for the first time
since 1991, Spanish unemployment surged to a nine-year high and
euro zone services and manufacturing activity shrank in
January, albeit at a slower pace, but still recessionary.
Gloom abounded from elsewhere, too. U.S. bellwether General
Electric Co <GE.N> posted a 44 percent drop in quarterly profit
and the Bank of Japan warned that financial conditions have
become tighter even with its key policy rate near zero.
"Sentiment is very fragile," said Darren Winder, strategist
at Cazenove.
"People want to believe in economic recovery and want to
see some light at the end of the tunnel, but they are finding
it very difficult to see that when you have got a banking
system which is still experiencing severe difficulties."
The pan-European FTSEurofirst 300 <> index of top
European shares ended down 0.3 percent at 760.54 points, its
lowest close since April 2003. The close was slightly lower
than a previous low set on Nov. 21.
Insurers were in the doldrums. Swiss Re <RUKN.VX> lost 19.6
percent on worries it could make further write-downs when it
reports full-year results on Feb. 19.
Banks also fell, with BNP Paribas <BNPP.PA> off 7.8
percent, the second-biggest drag on the FTSEuropefirst 300,
while Axa <AXAF.PA>, the biggest drag, fell 6.7 percent.
U.S. stock ideclines were fueled by worries of how 2009
will fare. GE was off more than 8 percent after the Dow
component warned of an "extremely difficult" 2009.
"GE is the bellwether because they operate in almost all
segments of the market and there's no segment here that you can
really look at and say that looks good," said Paul Mendelsohn,
chief investment strategist at Windham Financial Services in
Charlotte, Vermont.
"On average companies are saying they expect a very, very
challenging year and that's part of what's causing the
problem," he said.
Around 1:40 p.m., the Dow Jones industrial average <>
was down 29.63 points, or 0.36 percent, at 8,093.17. The
Standard & Poor's 500 Index <.SPX> was up 5.12 points, or 0.62
percent, at 832.62. The Nasdaq Composite Index <> was up
19.16 points, or 1.31 percent, at 1,484.65.
The pound and euro fell to session lows after data showed
the British economy shrank 1.5 percent in the fourth quarter,
far more than analysts had expected and confirming a
recession.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.44 percent at 85.86. Against
the yen, the dollar <JPY=> was up 0.12 percent at 88.90.
The euro <EUR=> was down 0.42 percent at $1.2929.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
20/32 in price yield 2.67 percent. The 30-year U.S. Treasury
bond <US30YT=RR> fell 59/32 in price to yield 3.35 percent.
Oil prices rose on mounting evidence that the Organization
of Petroleum Exporting Countries is complying with the bulk of
its record output cuts.
The gains came after oil consultant Petrologistics
estimated OPEC production would fall by 1.55 million barrels
per day in January as part of the cartel's efforts to meet a
2.2 million barrel per day reduction agreed in December.
U.S. light sweet crude oil <CLc1> rose $1.74 to $45.41 a
barrel.
Spot gold prices <XAU=> rose $39.45 to $896.00 an ounce.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 2.4 percent to the lowest since Dec 5,
while Japan's Nikkei share average <> finished at a
two-month low, down 3.8 percent.
(Reporting by Leah Schnurr, Nick Olivari and Chris Reese in
New York and Ian Chua, Phakamisa Ndzamela, Jane Merriman,
Joanne Frearson and Jan Harvey in London; writing by Herbert
Lash; Editing by Dan Grebler)
