* U.S. jobs data and Hungary debt worries pressure markets
* World stocks fall on risk aversion
* Euro at 4-year low vs dollar, below $1.20
* Strong German manufacturing data fails to rally markets
* Gold rallies to just below all-time highs
By Manuela Badawy
NEW YORK, June 7 (Reuters) - U.S. stocks fell on low volume
on Monday after strong German manufacturing data failed to
improve restore investor confidence in global economic recovery
in the wake of poor U.S. jobs data on Friday.
The euro slid to a new four year low below $1.19, while
safe-haven investments such as U.S. Treasuries gained, and gold
prices rose to just $10 below their all-time high as on concern
that the U.S. economic recovery may be slowing, Europe's
economies are being hit by fiscal austerity measures and even
China's boom may be topping out.
Data Friday showed the U.S. economy generated fewer jobs
than expected in May and comments from Hungarian officials
suggested the country could face a Greek-style debt crisis. The
Hungarian government on Monday though stressed that the country
was not in the same situation as Greece and would meet budget
deficit targets set in an aid deal with the International
Monetary Fund and European Union.
Germany Monday reported industrial orders jumped far
more than expected in April, adding to signs that Europe's
largest economy was on the path to durable growth, but the data
did little to raise hopes of a healthy recovery in Europe as a
whole.
"There is a lot of nervousness in the market. On the one
hand we have the positive (German manufacturing) data, but
there is also anxiety about Hungary keeping pressure on the
market," said Heinz-Gerd Sonnenschein, equity markets
strategist at Deutsche Postbank.
U.S. stocks dropped on low volume, led by industrial and
technology shares, as investors stayed on the sidelines after
last week's jobs data discouraged buyers.
The Dow Jones industrial average <> ended down 115.48
points, or 1.16 percent, at 9,816.49. The Standard & Poor's 500
Index <.SPX> fell 14.41 points, or 1.35 percent, at 1,050.47.
The Nasdaq Composite Index <> dropped 45.27 points, or
2.04 percent, at 2,173.90.
MSCI's all-country world stock index fell almost 2.0
percent, and its emerging market index dropped 2.7 percent.
In the currency markets, European corporate demand helped
lift the euro after it fell to $1.1876, its weakest level since
March 2006. But the euro remained below $1.20, a level broken
on Friday after Hungary's warning about its deficit reminded
investors of the severe debt problems plaguing some European
countries.
The euro last traded down 0.48 percent at $1.1916 from a
previous session close of $1.1973. Against the Japanese yen,
the U.S. dollar <JPY=> was down 0.46 percent at 91.49 from a
previous session close of 91.910.
"After Hungary's warning and weaker-than-expected U.S. jobs
data Friday, selling got a bit overdone," said Amelia Bourdeau,
senior strategist at UBS in Stamford, Connecticut.
Hungary -- a member of the European Union but not the euro
zone -- is of minimal importance on the global level, but there
are concerns about exposure among leading banks if Hungary
defaults or if the fall in the forint currency fuels a rise in
loan delinquency among Hungarians who have borrowed heavily in
euros and Swiss francs.
It also comes hard on the heels of worries about defaults
in Greece and other southern euro zone members.
"Greece can't devalue or easily default on its debt, but
presumably Hungary can, so it's a double-edged blade," said
Michael Woolfolk, senior strategist at BNY Mellon in New York.
Euro zone governments will issue about 27.5 billion euros
worth of new bonds this week, with Spain, Portugal and Italy
all due to hold auctions.
The pan-European FTSEurofirst 300 stock index closed 1.0
percent lower, pressured by a fall in BP's stock <BP.L>. The
U.S. Coast Guard said the United States will be dealing with
the oil spill from the April 20 rig explosion for another four
to six weeks. BP plans to double the amount of oil it is
capturing from its ruptured Gulf of Mexico well to 20,000
barrels per day.
Adding to the pressure, Goldman Sachs downgraded the oil
major to "neutral" from "buy."
U.S. Treasuries climbed as increasingly risk-averse
investors continued to look for safe-haven government bonds and
ahead of this week's $70 billion supply.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1/32, with the yield at 3.2022 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at 0.746
percent. The 30-year U.S. Treasury bond <US30YT=RR> was down
2/32, with the yield at 4.1361 percent.
Spot gold prices <XAU=> rallied $21.40, or 1.76 percent, to
$1240.40 an ounce just $10 below its all-time high as investors
took advantage of the dip in prices to buy the metal as a haven
from risk in other markets.
"We are seeing gold as the ultimate currency because of all
of these growing uncertainties surrounding sovereign debt in
the euro zone, and the fact that there are very few attractive
currencies out there, said Bill O'Neill, partner at New
Jersey-based commodity firm LOGIC Advisors.
"It's a perfect storm for gold."
(Additional reporting by Frank Tang, Steven C. Johnson in New
York, Harpreet Bhal in London; )
