* Wall Street, global equities slip on China's bank moves
* Commodity currencies fall on banking reserve requirement
* Oil slips below $81 on milder weather forecast, China
* Bonds gain in flight to safety buying as stocks retreat
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Jan 12 (Reuters) - Commodity prices slid and
stocks slumped around the world on Tuesday after China said it
would raise banks' reserve requirements in a move that could
damp a recovery from the worst global recession in decades.
A weak start to the corporate earnings season in the United
States and a profit warning from Chevron Corp <CVX.N> also hurt
investor sentiment.
European equities retreated from a 15-month high to close
lower while U.S. stocks fell, snapping a six-day winning
streak, after aluminum maker Alcoa Inc <AA.N>, the first major
U.S. company to release earnings, reported weaker-than-expected
results.
Asian stocks also fell, a day after hitting a 17-month
high, on investor jitters that tighter Chinese monetary policy
could slow economic expansion in China and cut the country's
strong worldwide demand for commodities and other goods.
The People's Bank of China surprised markets with a
statement that next week it would raise the reserve requirement
ratio in a move to stem the threat of inflation. For details
see: [].
"China may be trying to limit its growth rate," said Gene
McGillian of Tradition Energy in Stamford, Connecticut.
"Asian oil demand has been growing fast, but we haven't
really seen demand growth kick in in the United States or
Europe."
Oil fell by more than 2 percent from near a 15-month high,
helped by the easing of cold weather in the United States that
had been supporting U.S. fuel demand. []
The sudden central bank move in China came earlier than
investors had expected and appeared prompted by concerns that a
renewed surge in bank lending was flooding the economy with
cash, risking overheating and a surge in inflation.
Concerns in the United States that banks and other
financial services firms could face government fees in a bid to
recoup losses tied to industry bailouts sent the Nasdaq and S&P
500 stock indexes down by about 1 percent.
A senior U.S. official confirmed President Barack Obama is
considering a levy as part of the fiscal 2011 budget he will
unveil in February. Media reports said the fee could raise as
much as $120 billion.
The Dow Jones industrial average <> closed down 36.73
points, or 0.34 percent, at 10,627.26. The Standard & Poor's
500 Index <.SPX> fell 10.76 points, or 0.94 percent, at
1,136.22. The Nasdaq Composite Index <> slid 30.10 points,
or 1.30 percent, at 2,282.31.
Commodity-linked currencies, including the Australian, New
Zealand and Canadian dollars, hit session lows against the U.S.
dollar, following a sell-off in gold prices. They also tumbled
against the yen. []
"The Chinese announcement has the potential to be this
week's most important currency market driver and the market
reaction over the next 24-48 hours bears close watching," said
Nick Bennenbroek, head of currency strategy at Wells Fargo Bank
in New York in a note to clients.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.02 percent at 76.988.
The euro <EUR=> was down 0.21 percent at $1.4495. Against
the yen, the dollar <JPY=> was down 1.25 percent at 90.93 yen.
Industrial metals extended session losses after the close.
Copper sank to a near two-week low; zinc and nickel plunged to
their lowest in about three weeks and lead sank to its lowest
since Dec. 30 in the late sell-off. []
The 19-commodity Reuters-Jefferies CRB index <.CRB> fell
more than 2 percent to its lowest since Jan. 5, the first
trading day of 2010, before recovering to be off 1.68 percent.
U.S. crude for February delivery <CLc1> fell $1.73 to
settle at $80.74 a barrel, after hitting $83.95 on Monday. In
London, Brent crude <LCOc1> fell $1.67 to settle at $79.30.
U.S. February gold futures <GCG0> settled down $22 at
$1,129.40 an ounce in New York. []
The U.S. Treasury debt market rallied as a Wall Street
sell-off revived a safety bid for government debt, allaying
some concerns over appetite at this week's government bond
auctions. []
The developments in China and concerns about fiscal
problems in Greece reinforced the appetite for government debt,
said John Canavan, analyst at Stone & McCarthy Research
Associates in Princeton, New Jersey.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
26/32 in price to yield 3.72 percent, down from 3.82 percent
late Monday.
(Reporting by Ellis Mnyandu, Joshua Schneyer, Vivianne
Rodrigues and Richard Leong in New York and Ian Chua, Atul
Prakash, David Brett and Jan Harvey in London; Writing by
Herbert Lash; Editing by James Dalgleish)
