* 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
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 7 (Reuters) - U.S. and European stocks fell
on Tuesday ahead of what was expected to be a dismal corporate
earnings season, causing investors to shun risky assets in
favor of safe havens such as the U.S. dollar and gold.
Oil fell nearly $2 a barrel, tracking losses in stocks, as
investors tried to gauge the strength of the global economy and
eyed another rise in U.S. crude inventories from data to be
released later Tuesday and on Wednesday.
A sign of economic weakness came from revised data that
showed the euro zone's gross domestic product shrank more than
previously estimated in the fourth quarter, suggesting an even
worse 2009 figure and a still weakening economy.
U.S. Treasuries rose as the gloomy outlook for stocks and
rising concern over the poor quality of assets still haunting
major banks enhanced the safe-haven allure of government debt.
The kick-off to the earnings season by U.S. aluminum maker
Alcoa Inc <AA.N> after the market close on Tuesday weighed on
sentiment, with expectations of a second straight quarterly
loss and signs of weakness in world energy demand.
"There is caution ahead of the earnings season," said
Matthew Strauss, senior currency strategist at RBC Capital
Markets in Toronto. "It's quite clear that risk aversion is
driving the market."
Alcoa fell 1.5 to $7.79 at the close, but rose to $8 a
share after results were released after markets closed
[].
Alcoa said it saw both near-term and long-term catalysts
that should improve the prospects for the aluminum industry.
The Dow Jones industrial average <> closed down 186.29
points, or 2.34 percent, at 7,789.56. The Standard & Poor's 500
Index <.SPX> tumbled 19.93 points, or 2.39 percent, at 815.55.
The Nasdaq Composite Index <> shed 45.10 points, or 2.81
percent, at 1,561.61.
Concerns about global growth could be seen in big
industrial stocks and oil giants Exxon Mobil <XOM.N> and
Chevron <CVX.N>, which were among the largest drags on the
Dow.
Exxon fell 1.9 percent to $68.71, and Chevron fell 2.1
percent to $68.40. Other top drags included heavy equipment
maker Caterpillar <CAT.N> and aircraft maker Boeing <BA.N>.
Caterpillar slid 5.9 percent to $29.45, and Boeing fell 4
percent to $36.64.
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 6.3 percent, Lloyds <LLOY.L> slipped more than
8.5 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.
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 crude for May delivery <CLc1> settled down $1.90
at $49.15. London Brent crude <LCOc1> settled $1.02 lower at
$51.22.
Gold remained strong as investors sought a safe haven at
the start of corporate earnings season.
Gold for June delivery <GCM9> closed up $10.50 at $883.30
in New York.
The Australian dollar see-sawed against the U.S. dollar
after the Reserve Bank of Australia cut interest rates by 25
basis points to a record low 3.0 percent. []. The
Australian dollar was last unchanged at US$0.7122 <AUD=>.
Eurodollar is being "driven down by a return to risk
aversion," said Dan Cook, a senior market analyst at IG Markets
Inc. in Chicago.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.55 percent at 85.211. Against
the yen, the dollar <JPY=> fell 0.65 percent at 100.32.
The euro <EUR=> fell 1.03 percent at $1.3268.
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
9/32 in price to yield 2.90 percent. The 2-year U.S. Treasury
note <US2YT=RR> added 2/32 in price to yield 0.92 percent.
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)
