* Euro at 18-month low vs dollar on euro zone debt
* Skepticism about fiscal austerity drives risk aversion
* S&P 500 falls over 2 pct despite positive U.S. data
(Updates with U.S. markets)
By Walter Brandimarte and Naomi Tajitsu
NEW YORK/LONDON, May 14 (Reuters) - The euro hit an
18-month low versus the dollar and global shares fell sharply
on Friday over fears Europe's fiscal austerity plans may derail
economic recovery.
Worries about fallout from the euro zone debt crisis
spurred appetite for safer investments, pushing gold to a
record high and supporting demand for U.S. Treasuries. The
dollar reached its strongest in a year versus a basket of key
currencies.
Stocks and commodity prices plunged, despite data showing
U.S. retail sales and industrial production rose firmly in
April. Major U.S. stock indexes traded with losses of 1 percent
to over 2 percent. U.S. crude oil prices fell 1.3 percent.
For details on U.S. economic data, see [].
European authorities announced a massive debt safety net
for Greece, Spain and Portugal this week, but investors remain
skeptical those countries can take the pain of overhauling weak
public finances.
"If you look long-term, everyone is worried about what
these austerity measures will mean in terms of growth," said
Kathy Lien, director of currency research at GFT in New York.
The Dow Jones industrial average <> dropped 178.74
points, or 1.66 percent, to 10,604.21. The Standard & Poor's
500 Index <.SPX> fell 23.91 points, or 2.07 percent, to
1,133.53. The Nasdaq Composite Index <> lost 55.21 points,
or 2.31 percent, to 2,339.15.
Shares of credit card companies tumbled a day after the
U.S. Senate voted to limit fees charged on credit and debit
card transactions. Visa Inc <V.N> lost 7.9 percent and
MasterCard Inc <MA.N> shed 7.0 percent. []
The MSCI world equity index <.MIWD00000PUS> plunged 2.81
percent, while the FTSEurofirst 300 index <> slumped 3.7
percent.
U.S. crude oil <CLc1> fell roughly 3 percent on the day to
hit a three-month low of $72.17 per barrel.
EURO BATTERED
The EU's emergency assistance plan has done little to
bolster confidence in the euro system, a concern highlighted by
U.S. While House Economic Adviser Paul Volcker. On Thursday
Volcker said European debt troubles could undermine the single
currency. []
The euro <EUR=> slid as low $1.2365 on electronic trading
platform EBS, the lowest since October 2008. It last traded at
$1.2380.
"The euro hasn't derived any benefits from any budget cuts
from Spain and Portugal," said Chris Turner, head of FX
strategy at ING, which forecasts the euro will be at $1.15 in
six months.
"People are either concluding that these cuts will be
unsuccessful and debt sustainability remains a key issue, or
they will be successful in aggressive fiscal tightening and
that these economies would slow aggressively and the European
Central Bank has to keep interest rates low," he added.
Gold prices <XAU=>, which often climb in times of risk
aversion, soared to a record high of $1,248.95.
The safe-haven appeal of U.S. Treasuries was also rising,
with benchmark 10-year notes <US10YT=RR> rising 23/32 in price,
with the yield at 3.4516 percent.
Investors' anxiety towards riskier assets also has been
reflected in the movement of cash between markets this week.
Money market funds, perceived to be among the least risky
investments, attracted new money this week for the first time
since January as investors moved back into cash, data from EPFR
Global showed. []
At the same time, the amount of money pulled from risky,
high-yield bond funds hit a five-year high, while equity funds
in emerging markets also suffered.
(Additional reporting by Natsuko Waki in London and Wanfeng
Zhou in New York; Editing by Andrew Hay)
