Stocks at 1-month low, euro edges up

A man looks at an electronic board displaying various market indices from around the world outside a brokerage in Tokyo May 16, 2011.

NEW YORK (Reuters) - World stocks fell to a one-month low on Tuesday on Europe's debt crisis and data that spurred new doubts about the global economic recovery, while a late pick-up in the euro brought commodities off early lows.

The single currency rose against the U.S. dollar in choppy trade, but was seen still vulnerable to global risk aversion and the possibility that Greece might restructure its debt.

The euro gained 0.55 percent to $1.4233, helping lift oil, copper and gold prices off their lows.

U.S. housing starts and building permits plunged in April and factory output declined for the first time in 10 months as Japan's earthquake interrupted the supply of parts to auto makers.

The weak data weighed on U.S. stocks on concerns the recovery is taking longer than expected. Shares of industrial powerhouse Caterpillar Inc (CAT.N) dropped 3.8 percent, while a disappointing outlook from Hewlett-Packard Co (HPQ.N) also took a toll on Wall Street.

"Today's market largely reflects the intensifying concerns that the global economy is slowing or worse," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

"Leading indicators for the economy are starting to give ground and all of that is bothering investors."

The Dow Jones industrial average .DJI dropped 68.79 points, or 0.55 percent, to 12,479.58. The Standard & Poor's 500 Index .SPX dipped 0.49 point, or 0.04 percent, to 1,328.98. The Nasdaq Composite Index .IXIC edged up 0.9 point, or 0.03 percent, to 2,783.21.

The FTSEurofirst 300 index .FTEU3 of top European shares closed down 1 percent at 1,126.94, the lowest close since April 19, as disappointing economic numbers hurt sentiment.

German investor sentiment fell more than expected in May, indicating surging growth in Europe's largest economy could ease over the course of the year. In the UK, annual inflation hit a 2-1/2-year high in April.

World stocks as measured by MSCI .MIWD00000PUS dropped 0.5 percent, off for a fifth day for a near 3 percent slide.

However, U.S. dollar-denominated Nikkei futures rose 0.2 percent as the dollar rose 0.6 percent against the yen.

Investors face the end of the U.S. Federal Reserve's $600 billion asset-purchase program next month. The flow of cash generated by the program, coupled with ultra-low interest rates, has fueled investments in higher-yielding assets in recent months.

GREEK DEBT DRAGS ON EURO

Europe's top financial officials broke a taboo on Tuesday and acknowledged for the first time that Greece may have to restructure its debts, a move that could stoke Europe's sovereign debt crisis.

Speaking on the sidelines of an EU finance ministers' meeting, Jean-Claude Juncker, chairman of the 17-country Eurogroup, said there was a need to move toward what he called a "soft restructuring" of Greek debt.

"We're going to hear a lot of back and forth as to what politicians and other European officials think, and it would be hard for the euro to find a clear direction," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York.

The euro was last up 0.6 percent at $1.4235, a day after hitting a seven-week low of around $1.4048 on trading platform EBS. Some traders said as long as the euro stayed below its 55-day average of $1.4280, it was vulnerable to a test of recent lows.

The U.S. dollar index .DXY, a measure of the greenback against a basket of currencies, edged 0.15 percent lower.

July Brent crude was down 0.6 percent at $110.18 a barrel, while U.S. crude for June delivery was down 0.2 percent at $97.15 after being down as much as 2 percent earlier.

Gold fell but was off its lows as the dollar reversed course. Commodities have recently been fragile after steep run-ups.

Spot gold was down 0.4 percent at $1,483.70 an ounce at 2030 GMT, up from a session low of $1,471.50.

Copper also edged lower on worries over the economic recovery. Benchmark copper .CMCU3 was at $8,830 a ton versus $8,839 at Monday's close.

The Reuters/Jefferies CRB index of commodities .CRB was on track to close at its lowest level since February.

(Additional reporting by Edward Krudy, Caroline Valetkevitch, Gertrude Chavez-Dreyfuss, Julie Haviv and Robert Gibbons; Editing by Dan Grebler)