* Greek crisis and contagion fears hit markets
* Global stocks lower, emerging markets lead the way
* Euro hits 14-month low against dollar before recovering
(Updates with U.S. trading, analyst comment)
By Al Yoon and Jeremy Gaunt
NEW YORK/LONDON, May 6 (Reuters) - World shares tumbled and
the euro came under renewed pressure on Thursday in what is
shaping up to be a major flight to safety on fears of contagion
from the Greek debt crisis.
Wall Street shares fell, following signs of soft U.S. sales
and disappointment the European Central Bank offered no new
measures to ward off the region's sovereign debt troubles.
Investors sold corporate debt on worries the euro zone crisis
would hurt U.S. growth.
Emerging markets, many in reasonable economic shape and
relatively detached from euro zone stress, were particularly
hard hit, with shares <.MSCIEF> falling 2.17 percent as
investors shed riskier assets.
"The bull market always had to end somewhere and it looks
like this could be the trigger," said Ben Potter, analyst at IG
Markets. "There's no let-up in concerns that the euro zone debt
crisis could continue to worsen and as a result equity markets
across the globe remain under pressure,"
MSCI's all-country world stock index <.MIWD00000PUS>
tumbled 1.7 percent, to its lowest since March 1.
In the United States, the Dow Jones industrial average
<> declined by 98.78 points or 0.9 percent, to 10,769.34.
The Standard & Poor's 500 Index <.SPX> slipped 12.51 points, or
1.07 percent, to 1,153.39 and the Nasdaq Composite Index
<> lost 29.08 points, or 1.21 percent, to 2,373.21.
Europe's FTSEurofirst 300 <> index sank 1.41 percent
to 1,008.93, with its fall softened as BNP Paribas <BNPP.PA>
beat expectations on first-quarter profit. Its chief executive
officer called scenarios for contagion of Greece's crisis
"unfounded" even as the French bank revealed a 5 billion euro
exposure to the country.
Japan's Nikkei <> slumped 3.3 percent, catching up
with other bourses after a three-day holiday.
Focus was on the European Central Bank, which had been
expected to offer extra measures to ease a debt crisis that
sparked deadly riots in Athens on Wednesday and is now piling
pressure on Spain, Portugal and others.
Peter Cardillo, chief market economist at Avalon Partners
in New York said the ECB's decision to keep monetary policy
unchanged was not surprising but "with the euro collapsing,
investors wanted to see some sort of a defensive movement."
EURO WOE
The euro tumbled to a 14-month low of 1.2692 against the
dollar, and was recently trading <EUR=> down 0.58 percent at
$1.2738.
European policymakers have warned the euro's survival
depends on a life-support package for Greece agreed last
weekend. This has ratcheted up risk aversion and boosted
safe-haven demand for the dollar, pushing it to a one-year high
versus a basket of major currencies.
"The driver remains concerns about the European situation,
coupled with poor risk sentiment," said Kasper Kirkegaard,
currency strategist at Danske in Copenhagen.
The U.S. Dollar Index <.DXY> climbed 0.39 percent to
84.406. Against the Japanese yen, the dollar <JPY=> fell 0.34
percent to 93.55.
Core euro zone and U.S. government bond yields drew support
from investors seeking a haven from the Greece debt crisis.
Ten-year euro zone government debt yields <EU10YT=RR>
declined 0.04 percentage point to 2.83 percent, and benchmark
U.S. Treasury note yields <US10YT=RR> fell to 3.54 percent from
3.55 percent.
Meantime, risk premiums as measured in a benchmark index of
investment-grade U.S. corporate debt have risen almost 0.2
percentage point since early Monday, to 1.1 percentage point.
In energy and commodities, U.S. light sweet crude oil
<CLc1> fell 74 cents, or 0.93 percent, to $79.23 per barrel,
and spot gold <XAU=> rose $9.55, or 0.81 percent, to $1183.70.
(Additional reporting by Naomi Tajitsu in London and Angela
Moon in New York; Editing by Andrew Hay)
(Editing by Andrew Hay)
