* Equity markets tumble as radiation fears spark rout
* Yen rises on risk aversion after quake
* Oil slides further on Japan nuclear concerns
(Adds opening of U.S. markets, changes byline, dateline;
previous LONDON)
By Herbert Lash and Sujata Rao
NEW YORK/LONDON, March 15 (Reuters) - Fear of a nuclear
catastrophe in Japan slammed world stock markets on Tuesday,
shredding $1 trillion in equity valuations as investors poured
money into government bonds.
Gold fell 3 percent at one point, on track for its biggest
one-day loss since July, as the worldwide rout in equity
markets forced speculators to sell bullion to cover losses.
The global wave of risk aversion hit oil prices, driving
Brent crude futures <LCOc1> below $108 for the first time in
three weeks.
"This is a massive risk off day today," said Christin
Tuxen, analyst at Danske Bank. "The risk-averse sentiment is
coming through both in the equity market and euro dollar. It's
weighing on oil even though fundamental drivers should suggest
an upside."
European shares fell to their lowest level in 3 1/2 months,
the Nasdaq turned negative for the year and the Nikkei average
sank 10.6 percent, marking its worse two-day sell-off since
1987 as reports of rising radiation near Tokyo rattled
investors.
A crippled reactor at the nuclear complex in Fukushima
exploded and sent low levels of radiation floating towards
Tokyo, prompting some people to flee the capital and others to
stock up on essential supplies. []
The nuclear crisis is equivalent to number six on the INES
scale of nuclear accidents from 1 to 7, Kyodo news agency
quoted the French Nuclear Agency as saying. The 1986 Chernobyl
disaster was a seven and Three Mile Island a five.
MSCI's all-country world stock index <.MIWD00000PUS>, which
was valued at about $28.6 trillion on Monday, shred about $1.04
trillion as the nuclear crisis thrust financial markets into
turmoil. The index was down 2.87 percent.
Government debt prices rallied, with German Bunds
outperforming other euro zone bonds, and yields on 10-year U.S.
Treasuries falling to a six-month low overnight.
Traders caught betting that prices would fall had to
quickly reverse their positions.
The benchmark 10-year U.S. Treasury note <US10YT=RR> shot
up 23/32 in price to yield 3.27 percent.
"The market will be very hesitant to set up new shorts
after a rally like this," said Christian Cooper, head of dollar
derivatives trading at Jefferies & Co. in New York.
On Wall Street, the Dow Jones industrial average <> was
down 222.43 points, or 1.85 percent, at 11,770.73. The Standard
& Poor's 500 Index <.SPX> was down 23.65 points, or 1.82
percent, at 1,272.74. The Nasdaq Composite Index <> was
down 53.66 points, or 1.99 percent, at 2,647.31.
The Japanese yen jumped against higher-yielding currencies
as investors sold riskier assets in response to slower Asian
economic growth. The yen, Swiss franc and U.S. dollar found
support from hedge funds and Japanese retail investors.
[]
Against the yen, the dollar <JPY=> was down 0.86 percent at
80.91 and the euro <EUR=> was down 0.38 percent at $1.3937.
"With the threat of a major nuclear disaster unfolding, the
Nikkei suffered its third-steepest drop in history," said
Camilla Sutton, senior strategist at Scotia Capital in Toronto.
"Foreign exchange markets are shedding risk, with the dollar,
Swiss franc and yen all gaining ground."
Oil prices dropped sharply, with North Sea Brent crude
sliding $4.05 to $109.62. Earlier, Brent crude fell below $108
a barrel for the first time in nearly three weeks.
[]
U.S. light sweet crude oil <CLc1> lost $3.22 to $97.97 per
barrel.
Government debt prices rallied, with German Bunds
outperforming other euro zone bonds, and yields on 10-year U.S.
Treasuries falling to a six-month low overnight.
Traders caught betting that prices would fall had to
quickly reverse their positions.
The benchmark 10-year U.S. Treasury note <US10YT=RR> shot
up 23/32 in price to yield 3.27 percent.
"The market will be very hesitant to set up new shorts
after a rally like this," said Christian Cooper, head of dollar
derivatives trading at Jefferies & Co. in New York.
U.S. stocks tumbled more than 2 percent as U.S. shares seen
as exposed to the disaster and economically sensitive stocks
falling sharply.
Insurer American International Group Inc <AIG.N> slid 3.3
percent at $36.23, while aluminum producer Alcoa Inc <AA.N>
lost 3.2 percent at $15.60.
Spot gold prices <XAU=> fell $27.81 to $1,398.80 an ounce.
(Additional reporting by Edward Krudy and Emily Flitter in New
York; Nia Williams, Joanne Frearson, Marius Zaharia in London;
Writing by Herbert Lash; Editing by Jan Paschal)
