* Oil falls below $44, lowest level since February 2005
* Stocks slide as economic data flags tough times ahead
* U.S. government debt rallies in face of big job losses
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Dec 4 (Reuters) - Oil slid below $44 a barrel and
global stocks sold off on Thursday in response to deep cuts in
interest rates in Europe and more dire economic data that added
to worries about the depth of a worldwide slowdown.
Yields on euro zone government debt rose from multi-decade
lows this week after investors in Europe said the European
Central Bank, the Bank of England and the Swedish central bank
didn't go far enough when they slashed rates.
But U.S. government debt later rallied on a safe-haven bid
in face of the latest batch of dour European and U.S. economic
news pointing to a global downturn that could be the sharpest
and longest since the downswings in the early 1980s.
The number of U.S. workers on jobless benefits rolls hit a
26-year high in November, while leading U.S. retailers, with
the exception of Wal-Mart Stores Inc <WMT.N>, reported lower
sales last month.
Adding to the labor-market gloom, a host of U.S. and
European companies announced large layoffs, including top U.S.
phone company AT&T Inc <T.N>, which is eliminating 12,000 jobs,
and chemical maker DuPont Co <DD.N>, which is cutting 2,500.
In Europe, Swiss bank Credit Suisse <CSGN.VX> announced
5,300 layoffs and Japanese broker Nomura Holdings <6501.T> said
it would cut 1,000 jobs in London.
"The consensus is looking for a pretty deep recession,"
said Robert MacIntosh, chief economist at Eaton Vance Corp in
Boston. "There are going to be a lot more (layoffs) and we can
barely see the tip of the iceberg."
Wal-Mart's gain was overshadowed by other corporate news,
including a deluge of job cuts that signaled the recession is
worsening.
Shares of Merck, also a Dow component, fell nearly 4.0
percent to $25.45 after the drugmaker gave a 2009 financial
outlook below Wall Street's estimates.
Shares of AT&T <T.N> fell 2.4 percent to $28.38 after it
announced plans to eliminate 12,000 jobs and cut its capital
spending budget.
"The fact we're seeing these layoffs now tells you that it
must pretty darn tight out there for orders and sales,"
MacIntosh said.
WALL STREET
Shortly after 1 p.m., the Dow Jones industrial average
<> was down 77.10 points, or 0.90 percent, at 8,514.59. The
Standard & Poor's 500 Index <.SPX> was down 8.13 points, or
0.93 percent, at 862.61. The Nasdaq Composite Index <> was
down 12.75 points, or 0.85 percent, at 1,479.63.
The FTSEurofirst 300 <> index closed 0.4 percent
lower at 826.71 points in a choppy trade.
Miners were one of the top losers on the index, tracking
lower metal prices. Xstrata <XTA.L> fell 8.8 percent,
Antofagasta <ANTO.L> fell 4.4 percent and Rio Tinto <RIO.L> was
off 5.3 percent.
France announced a 26 billion euro stimulus plan for its
faltering economy as unemployment rose, the latest European
country to open state coffers to fight the downturn.
"We are not in a normal environment. We are facing the most
severe recession since 1930s. Once confidence is broken it
takes a lot of time and a lot of interest rate cuts to get
back," said Franz Wenzel, strategist at AXA Investment
Managers, in Paris.
As expected, the Bank of England cut rates by a full
percentage point to 2.0 percent and the ECB by 0.75 of a
percentage point to 2.5 percent. Sweden's Riksbank bolstered
hopes for aggressive cuts, slashing its repo rate by a record
1.75 percentage points to 2.0 percent. But the ECB and BOE cuts
failed to satisfy.
"Markets were certainly disappointed by (the ECB's) move
today, given what the Riksbank did," said Investec's chief
economist Philip Shaw.
The euro rose and sterling traded off a session low against
the dollar even after the big European rate cuts.
"It comes back to the theme of proactive rate cuts are seen
to be beneficial for the longer-term economic outlook," said
Brian Dolan, chief currency strategist at Forex.com in
Bedminster, New Jersey.
"Had they done only 50, you probably would see the euro
under pressure more than it is," Dolan said of the ECB.
The euro <EUR=> was up 0.57 percent at $1.2787.
The U.S. dollar was down against a basket of major
currencies, with the U.S. Dollar Index <.DXY> off 0.40 percent
at 86.439. Against the yen, the dollar <JPY=> was off 0.71
percent at 92.69.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
15/32 in price to yield 2.60 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 2/32 in price to yield 0.92 percent.
Oil prices were down almost 5.0 percent on demand worries.
"We think the oil market is mostly riding on a wave of
worry over weak demand that has taken on a life independent of
many actual statistics," said Tim Evans, energy analyst, Citi
Futures Perspective in New York.
U.S. light sweet crude oil <CLc1> fell $2.32 to $44.47 a
barrel.
Spot gold prices <XAU=> fell $7 to $765.65 an ounce.
Asian shares fell. The MSCI index of Asia-Pacific stocks
outside Japan <.MIAPJ0000PUS> slipped 0.6 percent and Japan's
Nikkei average <> fell 1.0 percent.
(Reporting by Ellis Mnyandu, Chris Reese, Nick Olivari and
Edward McAllister in New York Kirsten Donovan, Jan Harvey and
Atul Prakash in London; writing by Herbert Lash)
