* Stocks fall on economic woes
* Wall Street set for weak start
* Demand slump knocks oil to $39 a barrel
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 12 (Reuters) - Equities kicked off the week on a
down note and the euro fell on Monday with recurrent worries
about the global economy pushing investors away from riskier
assets and also driving oil below $39 a barrel.
Wall Street looked set for a subdued start.
Friday's December U.S. payrolls report, which showed more
than half a million jobs lost and the highest unemployment rate
since 1993, aggravated anxiety about U.S. consumer demand.
"The negativity still sits in the market, nothing's really
changed in 2009," said Dominic Vaughan, senior dealer at CMC
Markets in Australia. "In the next three to six months we've
still got difficult times ahead..."
MSCI's all-country world index <.MIWD00000PUS> was down
about 0.7 percent, taking the benchmark into negative territory
for the year-to-date and the fourth negative daily performance
in a row.
The pan-European FTSEurofirst 300 <> index of top
European shares was down 0.9 percent after losing 0.5 percent on
Friday. Japan's markets were closed for a public holiday.
Focus will turn to corporate result with expectations for
U.S. earnings generally low.
Seven of the 10 sectors in the S&P 500 <.SPX> are forecast
to show a year-over-year decline in earnings, the highest number
of sectors recording negative growth since eight sectors in the
in Q4 2001, according to Thomson Reuters proprietary research.
FALLING DEMAND
The worries about the U.S. and global economies hit oil,
which was down more than $1.75 at around $39 <CLc1>, flirting
with a sustained drop below the psychologically important $40
level.
News that OPEC kingpin Saudi Arabia plans to cut oil output
to below its agreed target for the cartel, ongoing supply
disruptions in Europe from the Russia-Ukraine gas dispute and
tensions in the Middle East did little to sway the market from a
focus on dwindling world-wide energy demand.
On currency markets, the yen rose broadly, hitting a
one-month high against the euro.
The euro was under pressure both from economic fears and as
expectations that the European Central Bank could opt for an
aggressive interest rate cut later this week to shore up the
euro zone's flagging economy.
"The U.S. payrolls numbers were pretty dreadful and helped
underline fears that the U.S. labour market is undergoing a
severe deterioration, knocking market confidence and helping to
fuel yen gains," BTM-UFJ currency economist Lee Hardman.
The euro shed 0.3 percent against the yen and was flat
against the dollar. It was as $1.3437 <EUR=> and 120.84 yen
<EURJPY=R>. The dollar fell against the yen, losing 0.4 percent
to 89.89 <JPY=>.
Euro zone government bonds were mixed as the market braced
itself for another heavy week of new bond issuance and dug in
ahead of Thursday's ECB decision.
Two-year bond yields <EU2YT=RR> were 1 basis points lower
at 1.571 percent, having touched a new low of 1.498 percent on
Friday. Ten-year yields <EU10YT=RR> were up 3 basis points at
3.042 percent.
(Additional reporting by Kevin Plumberg and Jessica Mortimer;
Editing by Victoria Main)
