* Stocks slide wildly on recession in global sell-off
* Dollar gains as weak U.S. data sparks risk aversion
* Oil slips below $70 for first time since August 2007
(Adds close of European markets, fresh pricings, quotations)
By Herbert Lash
NEW YORK, Oct 16 (Reuters) - Economic data pointing to a
U.S. recession shook markets on Thursday, reviving an aversion
to risk and sending global stocks lower, while oil slid below
$70 a barrel for the first time since August 2007.
European speculative-grade credit spreads revisited
record-wide levels and euro zone government bond prices pushed
higher as intensifying fears of world recession boosted demand
for safe-haven assets.
The dollar rose against the yen and euro in choppy trade as
investors sought shelter in dollar-denominated assets.
Fear of slowing global demand slammed commodity prices,
driving copper prices down almost 8 percent to a 33-month low,
while spot gold prices tumbled more than 5 percent.
U.S. industrial production posted the biggest monthly
decline since 1974 and the Philadelphia Federal Reserve Bank
reported its survey of Mid-Atlantic factory activity in October
plummeted to its lowest in 18 years.
Alan Ruskin, chief international strategist at RBS Global
Banking in Greenwich, Connecticut, said the Philly Fed data
confirmed that the meltdown in financial markets is being
closely followed by a dramatic slide in the economy.
"We have seen weaker Philly Fed data but only fleetingly at
the depths of recessions. Ugly data, more risk aversion,"
Ruskin said.
Oil prices fell after other U.S. government data showed
larger-than-expected increases in crude and gasoline
inventories and weaker demand for energy products.
U.S. crude oil inventories rose 5.6 million barrels last
week, the data showed, almost three times analysts' estimates
of a 1.9 million barrel increase.
"At this point it is like salt in the wounds. With the
bearish breakdown that we've had on economic news, there is
really nothing that has been positive," said Rob Kurzatkowski,
a futures analyst with OptionsXpress in Chicago.
U.S. share prices gyrated, opening higher and then falling
when the Philly Fed data came out. They rallied briefly as
investors snapped up beaten-down shares while a report saying
Microsoft may pursue a search partnership deal with Yahoo
<YHOO.O> pulled the Nasdaq higher, then slipped after Microsoft
said it had no interest in actually buying Yahoo.
At 1:30 p.m., the Dow Jones industrial average <> was
down 66.66 points, or 0.78 percent, at 8,511.25. The Standard &
Poor's 500 Index <.SPX> was down 8.72 points, or 0.96 percent,
at 899.12. The Nasdaq Composite Index <> was up 2.31
points, or 0.14 percent, at 1,630.64.
European stocks ended steeply lower, with oil and financial
companies leading the decline on fears of a global recession.
The FTSEurofirst 300 <> index of top European shares
unofficially ended down 5 percent at 858.41.
The top drag on the European index was Total <TOTF.PA>,
followed by HSBC <HSBA.L>. Total fell 9.2 percent and HSBC 4
percent.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.36 percent at 82.561.
The euro <EUR=> fell 0.44 percent at $1.3401, and against
the yen, the dollar <JPY=> was up 1.09 percent at 100.68.
The dollar has gained as global investors unwind risky
trades in higher-yielding currencies and assets, and reroute
the funds into safe-haven U.S. Treasuries or cash.
"Risk continues to dictate price moves in the currency
market, much to the benefit of the dollar," said Ashraf Laidi,
chief market strategist at CMC Markets in New York.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
2/32 in price to yield 3.94 percent, while the 2-year U.S.
Treasury note <US2YT=RR> was unchanged in price to yield 1.56
percent. Bond prices and yields move inversely.
U.S. light sweet crude oil <CLc1> fell 5.6 percent to
$70.36 a barrel.
Spot gold prices <XAU=> fell $46.35 to $801.65 an ounce.
The economic data overshadowed a decline in most of the
short-term lending rates overnight, indicating that efforts by
the central banks to loosen up credit may be working in the key
short-term market.
Fresh signs of a looming worldwide economic slowdown led
Japan's Nikkei <> to suffer its worst one-day losses since
the stock market crash of October 1987, slumping 11.4 percent.
(Reporting by Ellis Mnyandu, Ellen Freilich and Steven C.
Johnson in New York and Joe Brock, Peter Blackburn and Jan
Harvey in London; Writing by Herbert Lash; Editing by James
Dalgleish)
