* Global stocks fall on prospect of automakers' bankruptcy
* U.S. dollar, yen rise on renewed risk aversion jitters
* Bond prices, gold rise on flight to safety
* Oil falls on stronger dollar, sliding equity markets
(Recasts with U.S. markets, changes dateline, previous
LONDON)
By Herbert Lash
NEW YORK, March 30 (Reuters) - Global stocks skidded on
Monday as President Barack Obama's harsh medicine for ailing
U.S. automakers threatened bankruptcy for General Motors and
Chrysler, and oil fell below $50 a barrel on the slumping
equity markets and a stronger dollar.
The dollar and yen rallied on fears the two automakers may
be forced into bankruptcy after Obama rejected their turnaround
plans, prompting anxious investors to cut exposure to risk and
seek safety in the two currencies.
Gold also firmed as investors sought safety, but gold
futures later turned lower on the stronger dollar.
Bank rescues in Europe weighed on financial shares on both
sides of the Atlantic, while the renewed concerns about banks
and automakers lifted U.S. and European government debt
prices.
The flare-up of woes in the banking and auto industries
unnerved investors who bid up stocks and the dollar in recent
weeks on hopeful signs the economic downturn might be
bottoming.
The European efforts "really just hammer home the fact that
this crisis is worldwide and we know Europe's in worse shape
than we are," said Ryan Detrick, senior technical strategist at
Schaeffer's Investment Research in Cincinnati.
"The fear that they're nationalizing just leads to more
selling of our banks here, it's all really intertwined."
European markets fell after Spain was forced into its first
bank rescue since the financial crisis began and Germany and
Britain also acted to shore up lenders as the sector awaited
the brunt of the impact of rising bad loans. []
"Sentiment starts to change a bit and people realize that
maybe the government can't keep on bailing people out and they
indicate that with the auto today," said Philip Gillett, sales
trader at IG Index. "It puts a bit of fear into the market."
Adding to the bank worries were comments from U.S. Treasury
Secretary Timothy Geithner on Sunday that some banks still need
substantial aid. He said the government will have about $135
billion left after other banks give back some of the bailout
money, but declined to say if he would ask Congress for more.
[]
The U.S. government's rejection of turnaround plans for GM
<GM.N> and Chrysler added to already dampened investor
sentiment and exacerbated the sell-off in stocks.
The MSCI all-country world index <.MIWD00000PUS> fell 4.2
percent, almost wiping out last week's 4.5 percent gain.
After 1 p.m., the Dow Jones industrial average <> was
down 276.46 points, or 3.56 percent, at 7,499.72. The Standard
& Poor's 500 Index <.SPX> was down 29.24 points, or 3.58
percent, at 786.70. The Nasdaq Composite Index <> was down
49.99 points, or 3.24 percent, at 1,495.21.
Among bank shares, Citigroup <C.N> tumbled about 9 percent
and Bank of America <BAC.N> dropped 15 percent. The KBW Bank
index <.BKX> shed 7.2 percent.
Banks and commodity stocks led European markets lower, with
the FTSEurofirst 300 <> index of top regional companies
closing down 3.85 percent at 709.10 points.
Banks took the most points off the index on news that Spain
would bail out regional savings bank Caja Castilla la Mancha,
the first Spanish banking rescue since the crisis began. Spain
said it will provide 9 billion euros ($12.1 billion) in
government guarantees to back the bank [].
Oil fell more than 6 percent and copper tumbled 4 percent
as a persistently weak demand outlook put a brake on an
impressive rally this month in commodity prices.
"Stock markets have taken a bit of a pounding, the dollar
has improved and the U.S. car industry news -- these have all
put a lot of pressure on oil markets this morning," said Rob
Montefusco, a trader at Sucden Financial in London.
U.S. light sweet crude oil <CLc1> fell $3.46 to $48.92 a
barrel.
Spot gold prices <XAU=> fell $4.65 to $916.40.
The euro continued to retreat from last week's two-month
high above $1.37, falling below $1.32.
The euro <EUR=> fell 1.02 percent at $1.3163.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.84 percent at 85.857. Against
the yen, the dollar <JPY=> fell 0.46 percent at 97.40.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
10/32 in price to yield 2.73 percent. The 2-year U.S. Treasury
note <US2YT=RR> rose 3/32 in price to yield 0.875 percent.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> extended losses, falling 4.7 percent. Japan's
Nikkei average <> fell 4.5 percent.
(Reporting by Chuck Mikolajczak, Steven C. Johnson and Ellen
Freilich in New York and Kirsten Donovan, Paul Lauener, Joe
Brock, Dominic Lau and Joanne Frearson in London; writing by
Herbert Lash; Editing by Leslie Adler)
