* Stocks, commodities fall on China slows down growth
* Dollar, Treasuries up on safe-haven bid
* Investors' focused on Federal Reserve's statement
(Recasts, updates prices)
By Manuela Badawy
NEW YORK, Aug 10 (Reuters) - World stocks slumped and
commodity prices fell on Tuesday as weak Chinese imports
triggered concern of slowing growth in China and on uncertainty
whether the U.S. Federal Reserve will take aggressive action to
help America's faltering economic recovery.
The dollar rose and U.S. Treasury prices gained in a flight
to quality ahead of the Fed's decision, due later in the
afternoon following a one-day policy meeting.
Oil prices fell more than 1 percent as a slowdown in oil
imports by China, the world's second largest energy consumer,
underlined investors' fears that the global economic recovery
is losing momentum.[]
Although China's trade surplus surged in July to an
18-month high as exports rose, a government-induced slowdown in
investment took a tool on imports.
"China is certainly the global growth engine for almost all
parts of the world, especially to the United States. Their
macro data is influencing the psychology of investors of all
assets here," said Craig Peckham, equity trading strategist at
Jefferies & Co in New York.
Crude oil imports falling 3.2 percent from a year ago.
The news on China dragged on prices of commodity-related
shares on both sides of the Atlantic, with energy and metals
companies falling.
The Dow Jones industrial average <> was down 85.60
points, or 0.80 percent, at 10,613.15. The Standard & Poor's
500 Index <.SPX> was down 10.52 points, or 0.93 percent, at
1,117.27. The Nasdaq Composite Index <> was down 32.15
points, or 1.39 percent, at 2,273.54.
The S&P materials index <.GSPM> was down 1.7 percent and
the energy index <.GSPE> was off 1.3 percent.
The S&P 500 fell below its 200-day moving average ahead of
the Fed statement. The 200-day moving average, now at 1,115.50
points, is a widely followed technical signal, and a close
below that could indicate a turnaround in market momentum.
The Fed is not expected to shift interest rates from the
current level near zero, but is seen acknowledging recent
economic weakness and signal a willingness to take more steps
to support the softening recovery. The Fed will issue a
statement at about 2:15 p.m. (1815 GMT).
Investors began to reassess their expectations overnight.
Some see the Fed taking minor steps such as reinvesting funds
to maintain its balance sheet, while others say it will adopt a
wait-and-see attitude until at least next month.
The dollar advanced nearly 1 percent against a basket of
currencies. Against the yen the greenback was up 0.1 percent at
86.07 yen.
The euro <EUR=> fell as low as $1.3090 on electronic
trading platform EBS, down 1.1 percent on the day, while
sterling slipped more than 1 percent to $1.5722 <GBP=>.
The euro extended losses against the dollar to trade more
than 1 percent lower as the greenback was boosted by a growing
view the Fed was unlikely to announce any aggressive easing
measures.
CHINESE SIGNALS
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> dropped 1.2 percent, and the Thomson Reuters
global stock index <.TRXFLDGLPU> fell 1.2 percent.
The MSCI emerging markets benchmark <.MSCIEF> dropped 1.4
percent, with China's Shanghai Composite Index down 3 percent
after data showed Chinese import growth below expectations,
pointing to slowing domestic demand and economic activity.
In Europe, the FTSEurofirst 300<> index closed 0.9
percent lower with miners falling heavily. The STOXX Europe 600
basic materials index <.SXPP> lost 2.3 percent. Miners Anglo
American <AAL.L>, Antofagasta <ANTO.L>, BHP Billiton <BLT.L>,
Rio Tinto <RIO.L> and Xstrata <XTA.L> fell 2 to 3 percent.
Copper <MCU3> fell to its lowest in nearly two weeks, and
crude oil futures <CLc1> lost 1.5 percent to $80.22 a barrel on
concerns that China, the world's second largest energy
consumer, would buy less crude.
U.S. Treasury debt prices were steady to higher with
traders on watch for a potential sell-off if the Federal
Reserve does not signal in its policy statement that it is
ready to move to further prop up the economy.
Weakness on Wall Street spurred some safe-haven buying in
longer-dated Treasuries.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1/32, with the yield at 2.8269 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 2/32, with the yield at
0.5571 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
up 13/32, with the yield at 3.9966 percent.
(Additional reporting by Chris Reese, Angela Moon, and Wanfeng
Zhou; Editing by Leslie Adler)
