(Updates with U.S. close)
* Global recovery fears send stocks tumbling; boost bonds
* U.S. housing data exceeds bearish projections
* Euro hits six-week low vs dlr, nine-year trough vs yen
By Al Yoon
NEW YORK, Aug 24 (Reuters) - World stocks fell to one-month
lows on Tuesday and the yen hit a 15-year high as dismal U.S.
housing data added to fears the global economic recovery would
fizzle out.
Pessimism about global growth has grown infectious in
recent weeks after lackluster U.S. employment and consumer
reports. Fears were affirmed on Tuesday by a report showing
U.S. existing house sales slid way more than expected in July
after the government ended homebuyer tax credits. []
Federal Reserve Bank of Chicago President Charles Evans
said he was concerned about the strength of the U.S. recovery
but saw a return to recession as unlikely.
Earlier, a Bank of England policymaker said the UK risked
sliding back into recession, adding to broader risk aversion.
The comments drove 10-year British government bond yields near
record lows and 30-year German Bund yields to all-time lows as
investors sought safety. Bond yields move inversely to prices.
"The wheels are coming off the recovery," said Keith
Springer, president of Capital Financial Advisory Services in
Sacramento, California.
In New York, major indexes closed at their lowest levels in
seven weeks.
The Dow Jones industrial average <> slumped 133.96
points, or 1.32 percent, to 10,040.45. The Standard & Poor's
500 Index <.SPX> lost 15.49 points, or 1.45 percent, to
1,051.87 and the Nasdaq Composite Index <> fell 35.87
points, or 1.66 percent, to 2,123.76.
The bearish tone deepened after the U.S. housing report. It
showed July sales of existing homes dropped a record 27.2
percent from June to an annual rate of 3.83 million units.
Analysts polled by Reuters expected sales would fall 12 percent
to 4.7 million.
"The problem that pushed us into recession to some degree
still remains: There's still imbalance in the housing market,"
said Zach Pandl, an economist at Nomura Securities
International in New York. "Even after four years of declines,
housing remains the key threat to the (economic) recovery."
Economically sensitive companies were the biggest drags on
the Dow, including plane maker Boeing <BA.N>, which fell 3.7
percent to $60.93. Banks were also among hardest hit, with the
KBW Bank index <.BKX> down 2.2 percent.
Home building and related stocks slipped but came off their
lows after hitting technical support.
Major European shares <> shed more than 1.6 percent
and the MSCI world equity index <.MIWD00000PUS> fell 1.4
percent to its lowest since July 20. The Thomson Reuters global
stock index <.TRXFLDGLPU> was 1.2 percent lower.
Japan's Nikkei average <> fell 1.3 percent, dipping
below the closely watched 9,000 mark for the first time in 15
months, pressured by selling from hedge funds and foreigners.
The Nikkei index has shed nearly 15 percent so far this
year, compared with a 2.6 percent fall in the MSCI Asia
ex-Japan index. The 9,000-9,100 range had been strong support
for the benchmark Nikkei since last year.
BUOYANT YEN
The yen reached a 15-year high against the dollar and a
nine-year peak against the euro on fears the global economy was
slowing.
The yen continued its rise as Japanese Finance Minister
Yoshihiko Noda resisted market pressure to comment on possible
currency intervention. [] It briefly pared gains
after a Nikkei Business Daily report said Japan's Ministry of
Finance may consider unilateral yen-selling market
interventions to break speculative trades. [].
The dollar <JPY=> fell as low as 83.57 yen. It was last
trading at 84.12, for a loss of 1.12 percent.
"Unless the Japanese step in with something more
definitive, we will see speculative accounts drive the
dollar/yen down to 80 yen," said Paul Robson, RBS Global
Banking currency strategist. "That will hurt the Japanese
economy pretty hard, unless they do something more on the
fiscal side or resort to more quantitative easing."
The euro <EUR=> rose 0.13 percent to $1.2675, rebounding
after the U.S. housing report.
The scramble for less-risky assets sent the 10-year and
30-year German Bund yields <DE10YT=TWEB> <DE30YT=TWEB> down
more than 0.1 percentage point to record lows at 2.18 percent
and 2.79 percent respectively.
Benchmark 10-year U.S. Treasury yields declined 0.1
percentage point to 2.50 percent <US10YT=RR> after earlier
sliding to a 17-month low of 2.47 percent.
"The market is looking for any sign of weakness ...
There's so much bearishness around the U.S. economy at the
moment and that's casting a pall over equity markets and
helping government bonds," said Nick Stamenkovic, strategist at
RIA Capital Markets.
In commodities, U.S. light sweet crude oil <CLc1> fell
$1.70, or 2.33 percent, to $71.40 per barrel, as doubts about
the U.S. ability to consume record stocks weighed on
sentiment.
Gold <XAU=> rose $7.05, or 0.58 percent, to $1230.40.
(Additional reporting by Emelia Sithole-Matarise, William
James and Anirban Nag in London and Leah Schnurr, Vivianne
Rodrigues and Rodrigo Campos in New York; Editing by Dan
Grebler)
