GLOBAL MARKETS-Shares fall on growth worries, oil rebounds
* Shares fall in Europe and United States * Dollar up 0.5 pct, euro falls on crisis woes * China data indicates industry is contracting, output weak * Spain bond yields fall at auction By Ryan Vlastelica NEW YORK, Sept 20 (Reuters) - Shares around the world fell on Thursday along with the euro, after weak data from China and the euro zone and signs of a struggling U.S. economy underlined worries about global economic growth. Crude oil rose modestly after three steep days of losses, though it remains almost 7 percent on the week on concerns about demand prospects going forward. While the U.S. manufacturing sector managed to continue growing in September, it still suffered its weakest quarter in three years, data on Thursday showed. A separate report showed fac tory activity in the U.S. mid-Atlantic region shrank for the fifth month in a row in September, th ough the rate of contraction was n ot as severe as in prior months. [ID: nL1E8KJ6VH] "The reality of slowing economic and earnings growth that was swept under the rug for a few months pops back out again over the next month," Peter Boockvar, equity strategist and portfolio manager at Miller Tabak in New York said in a note. World shares and other risk markets have lost momentum this week with investors taking stock after the central banks of the United States, Japan and euro zone outlined plans for economic stimulus, driving a near 17 percent rise in the MNSI global index since June. U.S. stocks fell sharply in early trading, tracking the downbeat mood in Europe and Asia. T he Dow Jones industrial average was down 27.49 points, or 0.20 percent, at 13,550.47. The Standard & Poor's 500 Index was down 5.00 points, or 0.34 percent, at 1,456.05. The Nasdaq Composite Index was down 13.24 points, or 0.42 percent, at 3,169.38. European equities fell 0.4 percent and the MSCI world index slumped 0.9 percent. Hong Kong' s Hang Seng index lost 1.2 percent. In the currency market, t he euro fell 0.8 percent while the U.S. dollar index rose 0.6 percent. Weak data from major economies boosted demand for safe-haven assets, pushing up the benchmark 10-year U.S. Treasury note p rice <U S10YT=RR> by 7/ 32, with the yield at 1.7492 percent. The euro zone Purchasing Managers Index data underlined the effect of the bloc's debt crisis. The composite PMI, which combines data from the manufacturing and services surveys, fell to 45.9 from 46.3 in August, its lowest since June 2009. A figure below 50 denotes shrinking Of the European national indexes, only Germany was brighter with the manufacturing PMI at its highest level since March, although still showing a contraction. China's flash Purchasing Managers Index prompted the initial market gloom as it remained below 50 for an 11th month in a row. "Activity in China is still weak and the Europeans are scared to death," said a Brussels-based trader. "The Spanish situation is nerve-wracking but I think Spain's problems are well known." GROWTH WORRIES Spain's 10-year borrowing costs fell to their lowest level since January at a debt auction, although the relief may be brief as Prime Minister Mariano Rajoy hesitates over seeking an international bailout which would open the way for the European Central Bank to buy Spanish government bonds. German government bonds, favoured by risk averse investors, remained in demand. Bund futures were up 0.3 percent to 140.17, adding to the rebound they've seen this week having started at a 5-1/2 month low. The weak data and the debt crisis worries also pushed the euro further away from last week's 4-1/2-month high, hitting a one week low of $1.294 before a small recovery. Problems in Greece are back in focus after wrangling between Athens and the "troika" of inspectors from the European Commission, ECB and IMF over ways to stabilise the country's debts. The head of one of Germany's biggest banks, Commerzbank, warned on Thursday he thought another Greek debt restructuring would be needed. Many economists agree. "What the market clearly wants is a haircut (debt restructuring) for the official sector debt," said Tobias Blattner at Daiwa Securities. "Even if they fix it again, find some tricks to keep Greece in the euro and come up with the preparations that show that Greek debt is sustainable, nobody will believe it without a haircut." China's weak data were felt widely across Asian and commodity markets. Metals slipped with copper down over 1.5 percent and the Australian dollar, highly sensitive to its biggest export partner, slipped 0.8 percent. Brent crude prices rose 0.7 percent to $109. Recent losses have come on a promise from Saudi Arabia to boost supply. Spot gold, which is at its highest in over half a year, dropped 0.5 percent to $1,759.89 an ounce.