* U.S. stocks fall, pulled down by oil, recovery concerns
* Dollar, yen rise as risk outlook sours; euro falls
* Government debt dips on stronger-than-expected U.S. data
* Oil falls more than 3 percent on global demand worries
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, May 15 (Reuters) - U.S. stocks and oil prices
turned south on Friday as investors questioned recent rallies
in the face of economic data that still shows a mixed picture
of when economies will rise from a deep global recession.
The dollar and yen rose as worries persisted about global
economic prospects despite a batch of better-than-expected
U.S. economic data, prompting investors to seek shelter in the
two safe-haven currencies.
Gold climbed to a six-week high after data showed U.S.
core inflation rose more than expected in April, boosting the
precious metal's appeal as a hedge against rising prices.
Oil fell toward $56 a barrel, pressured by weak global
demand and a stronger dollar.
Europe sank to what may have been the recession's low
point in the first quarter of this year as tumbling German
exports and investment plus further sharp drops in output
elsewhere hastened the pace of a year-old contraction.
Official GDP estimates showed the period was the worst
since records at the European level began in 1995.
"Overall risk appetite is still down because of the bad
numbers from Europe," said Matthew Strauss, senior currency
strategist at RBC Capital, in Toronto.
European shares closed higher, with gains for most banks
outweighing losses for defensive plays such as telecoms.
But U.S. stocks turned lower after earlier gains due to
the expiration of option contracts and a fresh assessment of a
jobs report on Thursday that was worse than expected, said
Rick Meckler, president of LibertyView Capital Management in
New York.
"Yesterday's rally, given the news, caught people off
guard and left the market in a place where no one's quite sure
of the next direction," Meckler said.
"With the weekend coming up and the potential for weekend
news, some people are taking some money off the table," he
said.
Shortly after 1:30 p.m., the Dow Jones industrial average
<> fell 46.43 points, or 0.56 percent, to 8,284.89. The
Standard & Poor's 500 Index <.SPX> shed 8.77 points, or 0.98
percent, to 884.30. The Nasdaq Composite Index <> slipped
4.02 points, or 0.24 percent, to 1,685.19.
The FTSEurofirst 300 <> index of top European shares
rose 0.5 percent to close at 839.94 points. Over the week, the
index fell 3.1 percent, but is up 30 percent from a lifetime
low on March 9.
But analysts were skeptical about when, and how strongly,
an economic recovery will come through.
"We've had a spectacular rally," said Philip Lawlor, chief
portfolio strategist at Nomura. "Risk appetite has rebuilt.
The question is about more green shoots.
"I don't think the data is actually going to turn positive
for another six or nine months," he said.
U.S. and euro-zone government debt slipped after U.S.
industry and consumer sentiment reports bolstered hopes the
economy might soon start to recover.
U.S. industrial production fell 0.5 percent in April, a
more modest pace than in recent months and less than the 0.6
percent economists had expected. []
The data dimmed the allure of safe-haven investments such
as U.S. Treasuries. Separate reports showing improved national
consumer sentiment and a slower rate of contraction in New
York state manufacturing this month also trimmed flight-to-
safety bids.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
16/32 in price to yield 3.16 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 1/32 in price to yield 0.87 percent.
In Europe, June Bund futures <FGBLc1> fell 53 ticks on the
day to 121.17, well off a one-week high of 122.07 set earlier
in the session.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.41 percent at 82.777.
The euro <EUR=> fell 0.80 percent at $1.3524. Against the
yen, the dollar <JPY=> was down 1.04 percent at 94.87.
U.S. light sweet crude oil <CLc1> fell $2.06 to $56.56 a
barrel.
Spot gold prices <XAU=> rose $4.70 to $930.05 an ounce.
Asian stocks rose as investors bought shares that stand to
benefit from an expected global recovery. MSCI's index of Asia
Pacific stocks outside Japan <.MIAPJ0000PUS> rose 1.7 percent,
while Japan's Nikkei share average <> added 1.9 percent,
(Reporting by Edward Krudy, Gertrude Chavez-Dreyfuss and
Burton Frierson in New York; Brian Gorman, Ian Chua, Christina
Fincher and Joe Brock in London; Writing by Herbert Lash;
Editing by Jan Paschal)
