GLOBAL MARKETS-Stocks, oil, gold fall on growth worries

* Global stocks drop over 1.0 pct on China, Europe, US data
* Brent at lowest since Dec 2010; US crude ended down 4 pct
* Spain's bond yields fall
* Bearish call from Goldman Sachs adds pressure to US stocks

By Caroline Valetkevitch
NEW YORK, June 21 (Reuters) - Global stocks fell more than 1
percent and Brent crude hit its lowest since December 2010 o n
Th ursday following data showing Chinese, European and U.S.
manufacturing activity had slowed further.
The weak data came just a day after the Federal Reserve
extended its monetary stimulus program aimed at boosting the
U.S. economy.
U.S. stocks added to losses after Goldman Sachs recommended
shorting the benchmark S&P 500 index. All three
major U.S. indexes were on track for their worst day since June
1.
Gold fell and was on track for its biggest decline in more
than three months, hurt by global economic worries, while the
U.S. dollar rose against the euro and yen as the Fed's move
disappointed investors who had hoped for a more aggressive
policy.
Business activity across the euro zone shrank for a fifth
straight month in June and Chinese manufacturing contracted,
while weaker overseas demand slowed U.S. factory growth, surveys
showed.
The data clouded the outlook for the world economy and
compounded fears that Europe's debt crisis, coupled with slower
growth in the United States and Asia, would hurt economies
worldwide.
"Markets are worried about the slowdown, not only in U.S.
figures but all around the world," said Jeffrey Saut, chief
investment strategist at Raymond James Financial in St.
Petersburg, Florida. "The (stock) market was extremely
overbought coming into this week, and the news gave it an excuse
to sell off."
The Dow Jones industrial average was down 214.41
points, or 1.67 percent, at 12,609.98. The Standard & Poor's 500
Index was down 25.94 points, or 1.91 percent, at
1,329.75. The Nasdaq Composite Index was down 56.46
points, or 1.93 percent, at 2,873.99.
World stocks, as measured by MSCI's global equity index
, declined 1.9 percent and European shares
ended down 0.5 percent.
On Wednesday, the Fed chose to extend its bond-buying
program, dubbed "Operation Twist," rather than implement more
extensive stimulus, as some had hoped.
The U.S. central bank made its decision after lowering
forecasts for growth and employment in the world's largest
economy in 2012 and 2013. It said it would consider more
stimulus measures if the situation worsened.
In Europe, preliminary manufacturing and service sector data
across the 17-nation euro area showed the downturn in the region
was becoming entrenched as falling new orders and rising
unemployment hit business confidence.
The survey data showed that Germany's private sector shrank
in June for the second consecutive month, with manufacturing
activity hitting a three-year low.
A similar survey of private sector activity in China,
compiled by HSBC, found its factory sector had shrunk for an
eighth straight month in June on weaker demand for exports.
Economic growth in the world's most populous nation is
widely expected to have slowed for a sixth consecutive quarter
in April through June as the country feels the impact of the
euro area debt crisis and property controls weigh on domestic
demand.
In U.S. stocks trading, energy and materials shares led
declines, with the S&P energy sector index down 3.7
percent and the materials index down 3.2 percent.
In the oil market, Brent crude fell $2.85 from
Wednesday's settlement to $89.84 a barrel, and hit its lowest
level since December 2010. NYMEX crude for August delivery
closed at $78.20, down $3.25, or 4 percent, marking the
lowest settlement for front-month U.S. crude since Oct. 4, 2011.
The dollar index, a measure of the greenback's
performance against a basket of currencies, rose 0.7 percent to
82.154.
Spot gold was down 2 percent at $1,574.40 an ounce.
"The manufacturing data was deflationary. Gold selling
accelerated following yesterday's Fed announcement, which was
modestly disappointing for those traders who had bought gold in
anticipation of more help from the Fed," said Mark Luschini,
chief investment strategist of Janney Montgomery Scott, a
broker-dealer with $54 billion in assets.

SPANISH BOND YIELDS DOWN
Spanish government bond yields fell sharply as Madrid tapped
the markets with a sale of medium-term debt, although at an
increased cost.
Spain sold 2.2 billion euros of two-, three- and five-year
bonds, slightly more than the relatively small stated target
amount, but it relied on its domestic banks to absorb the
issuance.
Ten-year Spanish government bond yields fell
15 basis points o n T hursday to 6.62 percent, having risen to
almost 7.30 percent last week.
U.S. bond yields were down as well. Benchmark 10-year
Treasuries were last up 9/32 in price to yield 1.62
percent, down from 1.65 percent late on Wednesday.