(Updates prices, adds details)
* US housing data drags down Wall St, European equities
* Oil falls after inventory data
* Dollar and yen rise on safe-haven bid
By Al Yoon
NEW YORK, Oct 28 (Reuters) - World stocks slipped and the
dollar rebounded on Wednesday as disappointing data on the U.S.
housing market raised worries about global growth, driving
investors to less risky assets.
The yen and the U.S. dollar climbed as traders flocked to
the two traditional havens from risk.
Oil fell below $78 a barrel after a surprise build in U.S.
gasoline stocks increased doubts over demand from the world's
largest fuel consumer.
Evidence the nascent rebound in U.S. housing and the
general economy is sputtering has investors reassessing their
bullish outlooks on global stocks, especially with the rally in
one global index gaining as much as 75 percent from March lows
through last week. Now data suggests businesses are holding on
to cautious outlooks, and played a role in more conservative
views of some widely-watched Wall Street economists.
The U.S. government reported the pace of new homes sales in
September unexpectedly tumbled 3.6 percent, the first drop in
six months. The surprise drop accelerated selling of equities
on Wall Street, which followed European stocks lower.
Another U.S. report showed orders for durable goods rose 1
percent in September, which was higher but falling short of a
"vigorous pace," said Michael Moran, chief economist at Daiwa
Securities America in New York.
European shares hit their lowest close in three weeks, led
by sharp falls in banking shares after Banco Santander reported
a 2.8 percent fall in net profit.
"The (housing) number was surprisingly weak. I think that
is going to add to the trend that we've seen recently where
investors are questioning the robust pace of economic recovery
going forward," said Joe Manimbo, currency trader at Travelex
Global Business Payments in Washington.
"That has benefited the dollar and helped to revive its
safe-haven appeal."
Key U.S. senators near the close of trading on Wednesday
reached a deal to expand a program of tax credits for Americans
who buy a home, according to sources, meeting requests of
bankers who claim the current credit for first-time buyers has
helped stabilize the market from its three-year downturn.
The Dow Jones Industrial Average <> fell 119.48 points,
or 1.21 percent, to 9,762.69. The Standard & Poor's 500 Index
<.SPX> lost 20.78 points, or 1.95 percent, to 1,042.63. The
Nasdaq Composite Index <> gave up 56.48 points, or 2.67
percent, at 2,059.61.
Among U.S. financial shares, JPMorgan Chase & Co <JPM.N>
fell 2.78 percent to $42.68 and Bank of America Corp <BAC.N>
lost 2.85 percent, to $15.01. Home builders took a hit, with
the Dow Jones U.S. Home Construction Index down 5.51 percent.
The pan-European FTSEurofirst 300 index <> closed
down 1.94 percent to 980.23 points, its lowest close since Oct.
5. Banco Santander <SAN.MC> declined 3.44 percent.
Ireland's big banks, Allied Irish Banks <ALBKI.I> and Bank
of Ireland <BKIR.I> plunged 11.9 percent and 25 percent,
respectively, on uncertainty over bank rescue measures.
The MSCI's all-country world stocks index <.MIWD00000PUS>
shed 2.14 percent to 283.31, taking the measure down 6 percent
from Oct. 20, which marked a 75 percent gain from March.
Japan's Nikkei <> declined 1.35 percent to 10,075.05.
"The market has taken off its rose-colored glasses," said
Heinz-Gerd Sonnenschein, an equity strategist at Postbank.
In foreign exchange, the yen and U.S. dollar gained with
the softened outlooks on global growth and on weaker stocks.
The dollar rose 0.45 percent versus a basket of major
currencies <.DXY>. The euro fell 0.66 percent to $1.4710, while
against the yen the dollar declined 1.1 percent to 90.78 yen.
The yen and dollar were boosted as investors shunned the
Australian dollar, which fell after Australian inflation data
suggested the country's central bank was unlikely to tighten
interest rates sharply.
Euro zone government bonds and U.S. Treasuries gained
traction on a safety bid on the back of the U.S. new home sales
report and falling equities.
Price gains for the benchmark 10-year Treasury note pushed
its yield down 0.03 percentage point to 3.42 percent. Strong
demand for a U.S. Treasury debt auction on Tuesday allayed
concerns about the cumulative impact of $123 billion in U.S.
government bond sales this week.
"With the global tone of equity markets weakening we think
a bullish fixed income correction is becoming increasingly
likely," analysts at Societe Generale said in a client note.
Oil fell $2.47 per barrel to $77.08.
(Editing by Kenneth Barry)
