* Europe sets Monday deadline for Cyprus bailout deal
* European shares, crude oil slide on weak manufacturing data
* Treasury prices gain on safety bid as Cyprus in focus
By Herbert Lash
NEW YORK, March 21 Global equity markets, crude oil and the euro fell on Thursday on fears of a potential banking collapse in Cyprus and signs the economic downturn in Europe is deepening.
Several upbeat U.S. economic reports on housing, future economic activity and business conditions in the mid-Atlantic region and improving Chinese factory output failed to lift investor sentiment.
Prices of U.S. Treasuries and German Bund futures rose as investors tried to gauge whether Cyprus would reach a deal to enable it to avoid default and a possible financial meltdown.
The benchmark 10-year U.S. Treasury note was up 6/32 in price to yield 1.9372 percent.
The European Central Bank gave Cyprus until Monday to raise billions of euros to clinch an international bailout or face losing emergency funds for its banks and inevitable collapse.
"There's a little bit of wait and see on Cyprus," said Lou Brien, market strategist at DRW Trading in Chicago. "If they can't come up with anything and the odds of Cyprus leaving the euro zone rise, then I think that will create a flight to safety in Treasuries."
Gold rallied to its highest in almost a month, with nervousness over Cyprus fueling sentiment for the safe-haven metal. Spot gold prices rose $6.85 to $1,612.70 an ounce.
A severe miss by Oracle Corp and a number of brokerages' cutting of their price targets on the tech icon pulled Nasdaq-listed stocks down. Oracle fell $8.71 to $32.64.
But the broad U.S. stock market pared losses, as underlying strength of a recent rally once again seemed to be prevailing.
"There is definitely more momentum left to the upside. In many days, we see the market start off lower but we manage to cut that by the end of the day. That's market strength," said Frank Gretz, chief technical analyst at Shields & Co in New York.
The Dow Jones industrial average was down 35.75 points, or 0.25 percent, at 14,475.98. The Standard & Poor's 500 Index was down 4.76 points, or 0.31 percent, at 1,553.95. The Nasdaq Composite Index was down 20.38 points, or 0.63 percent, at 3,233.81.
European shares fell after Germany, the region's leading economy, showed signs of fatigue and French businesses turned in their worst performance in four years. France, the euro zone's second-biggest economy, likely fell into a recession.
The decline on Wall Street came even as more data showed a slow but steady U.S. economic recovery. U.S. home resales hit a three-year high and prices jumped in February, while factory activity in the U.S. mid-Atlantic region grew in March after contracting for two months in a row.
Another report showed the Conference Board's Leading Economic Index, a gauge of future U.S. economic activity, rose for a third straight month in February.
The euro zone's economic woes occurred even before Cyprus' bailout troubles took center stage.
"Maybe we were expecting it in France but the weakness in Germany was a surprise," Antonio Garcia Pascual, chief southern European economist at Barclays, said of the two European mainstays' performances.
The FTSEurofirst 300 index of top European shares fell 0.53 percent to 1,192.56.
MSCI's all-country world equity index fell 0.2 percent to 358.87.
Crude oil was pushed lower by fears of further turmoil in the euro zone and by manufacturing data showing a deepening downturn in the currency bloc.
Brent crude for May delivery fell 80 cents to $107.92 a barrel. U.S. crude for May was at $93.19, down 31 cents.