* U.S., European shares fall on bank, earnings concerns
* Dollar, yen gain on risk aversion before U.S. earnings
* Bonds rise as safe-haven buying returns
* Oil falls below $50 amid concerns about economic growth
(Recasts with U.S. markets, changes dateline, previous
LONDON)
By Herbert Lash
NEW YORK, April 7 (Reuters) - U.S. and European stocks fell
on Tuesday on lingering banking concerns and ahead of what is
expected to be a dismal corporate earnings season, causing
investors to shun risky assets in favor of safe havens such as
the dollar.
Oil fell below $50 a barrel, tracking losses in stocks, as
investors tried to gauge the strength of the global economy as
revised data showed the euro zone's gross domestic product
shrank more than earlier estimated in the fourth quarter,
pointing to an even worse 2009 figure.
U.S. Treasuries rose as the dour outlook for stocks and
rising concern over the poor quality of assets still haunting
major banks enhanced the safe-haven allure of government debt.
Jitters regarding financial companies have resurfaced as
investors gird themselves for the first-quarter earnings
reports of U.S. companies, ahead of its traditional start with
Alcoa Inc <AA.N> after the market's close on Tuesday.
Alcoa shares fell 2.2 percent.
"It's quite clear that risk aversion is driving the market,
that's why we're seeing gains in the dollar and yen," said
Matthew Strauss, senior currency strategist at RBC Capital
Markets in Toronto.
"There is caution ahead of the earnings season," he said.
Shortly after midday, the Dow Jones industrial average
<> was down 159.93 points, or 2.01 percent, at 7,815.92.
The Standard & Poor's 500 Index <.SPX> was down 14.08 points,
or 1.69 percent, at 821.40. The Nasdaq Composite Index <>
was down 27.95 points, or 1.74 percent, at 1,578.76.
Concerns about global growth also weighed on the stock
market, with oil giants Exxon Mobil <XOM.N> and Chevron <CVX.N>
among the largest drags on the Dow as oil fell.
Exxon fell 2.4 percent to $68.35, and Chevron fell 2.3
percent to $68.28.
European shares fell for a third straight session as
financial shares slipped ahead of the earnings season on
renewed worries about their balance sheets.
The FTSEurofirst 300 <> index of top European shares
closed 0.7 percent lower at 761.69 points.
Banks were among biggest losers. Standard Chartered
<STAN.L> fell 6 percent, Lloyds <LLOY.L> slipped more than 7.8
percent and UBS <UBSN.VX> shed 5.2 percent.
"There are still a number of major outstanding question
marks on what the authorities are going to do to mend the
banking system," said Jonathan Lawlor, head of European
research at Fox-Pitt, Kelton.
"It looks to be premature to call the bottom even if the
rate of descent and deterioration has seemingly slowed," he
said.
Crude oil has closely tracked the fortunes of broader
markets as investors look for clues as to when demand might
rebound.
"I think the road to recovery is a long one, and while we
await a recovery, global oil demand will be weak," Bache
Commodities broker Christopher Bellew said.
GDP in the 15 countries using the euro in the fourth
quarter contracted a record 1.6 percent from the previous three
months, more than the previously reported 1.5 percent.
U.S. light sweet crude oil <CLc1> fell $1.24 to $49.81 a
barrel.
The yen rebounded broadly and sharply, with short-term
players unwinding trades in higher-yielding currencies such as
the Australian and New Zealand dollars that had been financed
with the Japanese currency because of its low interest rates.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.54 percent at 85.203. Against
the yen, the dollar <JPY=> was down 0.32 percent at 100.66.
The euro <EUR=> was down 0.98 percent at $1.3274.
A report by The Times of London that said the International
Monetary Fund was set to forecast toxic assets on the balance
sheets of financial firms could reach $4 trillion helped push
bond prices higher.
Whatever the final tally of bad assets, few investors are
willing to bet there are no more nasty surprises lurking in the
U.S. banking sector.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
6/32 in price to yield 2.91 percent. The 2-year U.S. Treasury
note <US2YT=RR> added 2/32 in price to yield 0.92 percent.
Copper, a barometer of global growth, bucked the trend and
rose after a new drop in inventories suggested Chinese demand
is rising, but the rally eased as stock losses curbed
sentiment.
"Copper looks good," said Andrey Kryuchenkov, an analyst at
VTB Capital. "The Chinese will keep buying for infrastructure
programs, but I'd be very wary that we are still a little bit
in a bear rally."
Stocks snapped a five-day rally overnight in Asia, picking
up on renewed concerns about the health of U.S. banks that
rattled investors in the United States and Europe on Monday.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 1.25 percent while Japan's Nikkei share
average <> slipped 0.3 percent.
(Reporting by Chuck Mikolajczak, Gertrude Chavez-Dreyfuss and
Burton Frierson in New York; Jamie McGeever, Atul Prakash,
Emelia Sithole-Matarise, David Sheppard, Veronica Brown,
Rebekah Curtis and Michael Taylor in London; writing by Herbert
Lash; Editing by Leslie Adler)
