GLOBAL MARKETS-U.S. data douses equity rally, dollar falls vs yen

Fri Apr 12, 2013 10:32am EDT

* Shares fall as investors book profits

* Dollar falls from four-year high vs yen, dips below 99 yen

* Wall Street opens lower on weak U.S. retail sales

* Drop in consumer sentiment also weighs on risky assets

By Herbert Lash

NEW YORK, April 12 (Reuters) - World equity markets fell and the dollar retreated from a four-year peak against the yen on Friday after a dour reading of consumer sentiment and a drop in retail sales in March pointed to a weak U.S. economy with muted prospects for the future.

Wall Street extended losses after the Thomson Reuters/University of Michigan's survey showed sentiment tumbled to a nine-month low in April, with Americans especially gloomy about the long-term health of the U.S. economy.

An earlier report by the Commerce Department showed U.S. retail sales contracted in March for the second time in three months. The 0.4 percent drop exceeded analysts' expectations that sales would be flat.

Prices for U.S. Treasuries rose after the data, with the 30-year bond gaining more than a point, and Brent crude oil sank to a nine-month low below $102 a barrel.

"It is the latest in a growing list of economic numbers that will likely keep the dollar pressured and the Fed in no hurry to normalize policy," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, about retail sales.

The Dow Jones industrial average was down 18.20 points, or 0.12 percent, at 14,846.94. The Standard & Poor's 500 Index was down 5.16 points, or 0.32 percent, at 1,588.21. The Nasdaq Composite Index was down 8.64 points, or 0.26 percent, at 3,291.52.

MSCI's all-country world equity index fell 0.6 percent, while the pan-European FTSEurofirst 300 of leading regional shares was down 0.8 percent.

European shares snapped four straight days of gains amid concerns about the Cypriot economy and the euro zone's debt crisis weighed.

The benchmark 10-year U.S. Treasury note rose 14/32 in price to yield 1.7431 percent, while the 30-year U.S. Treasury bond was up 1-4/32 in price to yield 2.9400 percent.

"A combination of soft activity and extremely benign inflation data is a good signal for U.S. Treasuries, which are poised to rally on these and similar data over the coming months," said Rob Carnell, chief international economist at ING Bank.

A report from the U.S. Labor Department showed wholesale prices fell sharply in March due to lower gasoline costs. The seasonally adjusted producer price index fell 0.6 percent, the largest drop since May, after rising 0.7 percent in February.

The dollar fell 0.69 percent to 98.98 yen.

Brent crude fell $2.47 to $101.80 a barrel, while U.S. crude oil futures shed $2.31 to $91.20.