* 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) - U.S. stocks dropped sharply and
crude prices fell below $44 a barrel on Thursday after dismal
economic news on both sides of the Atlantic renewed worries
about the severity of a global slowdown.
Longer-dated U.S. government debt prices advanced ahead of
what is expected to be a weak U.S. employment report for
November on Friday, and after European central banks
aggressively cut interest rates.
Oil fell more than 6 percent to its lowest level in nearly
four years in response to bleak U.S. and European data, which
could spell a deeper decline in energy demand worldwide.
"What we're seeing is a manifestation of a broader economic
slowdown that's affecting all market sectors," said Fred
Dickson, market strategist for D.A. Davidson & Co.
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.
Wal-Mart was one of only five stocks on the 30-component
Dow to rise. Its gain was overshadowed by other corporate news,
including a deluge of U.S. and European job cuts that signaled
the recession is worsening.
Top U.S. phone company AT&T Inc <T.N> said it would
eliminate 12,000 jobs, and chemical maker DuPont Co <DD.N>,
announced it was 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 Dow Jones industrial average <> closed down 215.45
points, or 2.51 percent, at 8,376.24. The Standard & Poor's 500
Index <.SPX> fell 25.51 points, or 2.93 percent, at 845.23. The
Nasdaq Composite Index <> was down 46.82 points, or 3.14
percent, at 1,445.56.
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.
Oil prices have plunged more than $100 a barrel from an
all-time high of more than $147 in July as the global credit
crunch has reduced energy needs in large consumer nations.
U.S. light crude <CLc1> fell $3.12 to settle at $43.67, the
lowest since Jan. 5, 2005. London Brent crude <LCOc1> fell
$3.16 settling at $42.28.
Investor sentiment ebbed on the wave of economic data
showing a spreading slowdown.
"Relentless negativity is pressuring the oil complex," said
Mike Fitzpatrick, a vice president at brokerage MF Global.
Yields on euro zone government debt rose from multidecade
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.
U.S. government debt 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 benchmark 10-year U.S. Treasury note <US10YT=RR> rose
29/32 in price, pushing its yield down to 2.56 percent. The
2-year U.S. Treasury note <US2YT=RR> rose 4/32 in price, with
to yield 0.82 percent.
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.
The euro <EUR=> rose 0.51 percent at $1.2779.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.28 percent at 86.539.
Against the yen, the dollar <JPY=> fell 1.12 percent at 92.30.
Gold prices ended lower. Gold futures for February delivery
<GCG9> settled down $5 at $765.50 an ounce in New York
Asian shares fell. The MSCI index of Asia-Pacific stocks
outside Japan <.MIAPJ0000PUS> traded at break-even at day's end
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; Editing by
Kenneth Barry)
