* World stocks slide on recession fear as earnings add gloom
* Emerging markets lose 4.5 percent to three-year low
* Dollar hits 2-yr high vs basket of currencies
* Oil skids to below $70 a barrel, commodity losses mount
By Mike Dolan
LONDON, Oct 22 (Reuters) - Stock markets around the world
fell sharply again on Wednesday after concerns about economic
recession and falling commodity prices were fuelled by a fresh
spate of gloomy corporate earnings.
Emerging markets were hardest hit by the global retreat and
the fresh commodity pressure, with the U.S. dollar and
government bonds the big gainers.
MSCI's main index of emerging equities <.MSCIEF> fell some
4.5 percent to its lowest level since June 2005, sharply
underperforming the 2.45 percent loss in MSCI's index of world
stock markets <.MIWD00000PUS>.
Global miner BHP Billiton <BLT.L> warned on Wednesday that
Chinese demand was set to weaken, echoing concerns last week
from rival and takeover target Rio Tinto <RIO.L>.
China said on Monday its annual economic growth fell to 9
percent in the third quarter from 10.1 percent previously and
that factory output in September was at a six-year low.
"There is an increase in risk aversion. The emerging market
world appears to be starting to collapse; that means it'll be
much more difficult for the global economy to recover," said
Peter Mueller, rates strategist at Commerzbank in Frankfurt.
Commodity price losses mounted everywhere. U.S. crude oil
futures <CLc1> fell under $70 per barrel and London copper
futures <MCU3=LX> were down almost 4 percent to their weakest
since December 2005.
The commodity slide and emerging markets retreat all helped
boost the U.S. dollar <.DXY> to two year highs, while gold
prices <XAU=> fell to their lowest in over a month.
"The demand outlook is bleak and overall market performance
is poor. The metals market is ground zero in terms of
performance," said Lin Hui, analyst at Orient Futures
Securities.
MAJOR MARKETS SUFFER TOO
European shares followed Asian and Wall St <.SPX> stocks
lower in early trade on Wednesday.
At 0807 GMT, the FTSEurofirst 300 <> index of top
European shares was down 2.25 percent at 903.14 points, led by
basic resources and energy stocks.
The FTSEurofirst 300 has lost nearly 40 percent so far this
year, punctured by a credit crisis that has piled up the losses
at banks and slowed the economy. Vedanta Resources <VED.L>
dropped 8.8 percent, BHP Billiton <BHP.L> fell 7 percent, and
Rio Tinto <RIO.L> was 3.5 percent lower.
Losses in Asian shares accelerated in late trading there,
with Japan <> ending down 6.8 percent, and South Korea
<> slumping 5.1 percent. Shanghai's main bourse <> was
down 3.2 percent.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> declined 5.1 percent, at one point touching its
lowest since December 2004.
Wall St stock futures <SPZ8> were indicated down again on
Wednesday after a flurry of disappointing earnings heightened
worries about the deteriorating profit outlook.
Tech bellwether Texas Instruments Inc <TXN.N> warned of
slowing sales for its widely used analog chips, while chemical
company DuPont Co <DD.N> cut its full-year forecast. Caterpillar
Inc <CAT.N>, a maker of excavators and bulldozers, also missed
profit expectations, sending its stock down 5.1 percent.
DOLLAR SURGE
The dollar's rally to two-year highs against a basket of
major currencies <.DXY> was driven by a host of factors,
including repatriation of capital from emerging markets, falling
commodity prices, relentless banking stress and hopes for a U.S.
government fiscal boost to its economy.
The pressure of a higher dollar was felt most in Europe
against the British pound <GBP=D4>, which lost nearly three
percent to a five-year low of $1.6203 in Asian trade after Bank
of England chief Mervyn King warned the UK was entering
recession.
Britain will be the first of the Group of Seven top
economies to release third-quarter gross domestic product data
and the figures on Friday are expected to show its economy
contracted in that period.
The cost of protection against defaults in Asian and Europe
debt spiked to records after Argentina on Tuesday said it would
take over its $30 billion private pension system in order to
guarantee payments to retirees. []
By 0850 GMT, the Markit iTraxx Crossover index <ITEXO5Y=GF>,
made up of 50 mostly "junk"-rated credits, was at 780 basis
points, according to data from Markit, almost 10 basis points
wider versus late on Tuesday.
The index had jumped to around 795 basis points earlier,
setting fresh record wides.
Euro zone government bonds extended gains on Wednesday,
pushing the 10-year yield to its lowest in 1-1/2 weeks
At 0724 GMT, December Bund futures <FGBLc1> were 46 ticks
higher at 115.70 versus Tuesday's settlement close, having
earlier risen to 115.87 -- the highest since Oct. 10.
(Additional reporting by Ian Chua, Kevin Plumberg and Nick
Trevethan; Editing by Ruth Pitchford)
