GLOBAL MARKETS-Shares, oil fall on growth concerns; gold rises

Wed Apr 17, 2013 4:59pm EDT

* Weak European car sales add to worries on global economy

* Gold recovers after sharp falls but remains volatile

* Brent crude drops below $98/barrel as demand worries persist

* Euro in biggest daily decline vs dollar in almost a year

By Herbert Lash

NEW YORK, April 17 (Reuters) - World equity markets and commodities fell on Wednesday as global growth concerns dented investor sentiment yet again and disappointing earnings reports weighed on Wall Street stocks.

Copper, considered a barometer for manufacturing and China-related growth, fell more than 3 percent, weighed by worries about the global economy and a 10.3 percent decline in March European car sales, a key source of metals demand.

U.S. and European shares slid more than 1 percent after the car sales report added to fears about Europe's economy and after the International Monetary Fund on Tuesday downgraded its global growth projections for this year and next.

Defying earlier industry predictions of a second-half rebound, auto sales in Europe are headed for a sixth straight annual decline to a two-decade low.

"The macro outlook remains bleak and equities markets are still not pricing it in yet," said Jerome Troin-Lajous, a trader with Louis Capital Markets. "It's time to get protection, continue to get out of cyclical and industrial stocks, and turn overweight (on) 'flight-to-safety' trades."

Gold rose in choppy trade after a slide to two-year lows this week lured Asian buyers. Sentiment was severely shaken by the biggest two-day rout in 30 years, which ended on Monday, and gold is seen as vulnerable to further sell-offs.

Brent crude fell below $98 per barrel on the prospect of sluggish U.S. and Chinese fuel demand that will be squeezed at the same time by rising crude supplies in the United States.

The North Sea benchmark has lost 8 percent over the past six sessions in a commodities rout triggered by data showing growth in China, the world's second-largest oil consumer, slowed unexpectedly in this year's first three months.

"At the moment the oil complex is in a technical downtrend with the fundamentals being driven by a deteriorating demand projection in a robust supply environment," said Dominick Chirichella of Energy Management Institute.

TECHNOLOGY SHARES AMONG BIGGEST DECLINERS

The benchmark S&P 500 index retreated a day after its second-best performance of the year on several disappointing earnings reports and the drop in commodities.

Apple Inc fell below $400 a share for the first time since late 2011 after a disappointing revenue forecast from key supplier Cirrus Logic fanned fears of weakening demand for the iPhone and iPad. The shares later pared some losses, closing down 5.45 percent at $402.80.

"After Monday's gold sell-off spooked U.S. equities, it seems as though the dip buyers are a bit less aggressive, allowing the market to fall a bit more," said Gordon Charlop, a managing director at Rosenblatt Securities in New York.

Speculation about a German debt downgrade sparked heavy selling in Europe, which accelerated when Wall Street opened, Charlop said.

Stephen Massocca, managing director of Wedbush Morgan in San Francisco, said equities had over-extended a recent rally that was marked by few declines.

"It's hard to put your finger on one particular negative thing that's driving this," Massocca said. "I don't think this is going to get worse than this. It was a long overdue cleansing of what had been complacency in terms of what the market was doing."

The Dow Jones industrial average closed down 138.19 points, or 0.94 percent, at 14,618.59. The Standard & Poor's 500 Index fell 22.56 points, or 1.43 percent, at 1,552.01. The Nasdaq Composite Index shed 59.96 points, or 1.84 percent, at 3,204.67.

Shares of Intel Corp, the world's largest semiconductor maker, initially fell after it said its current-quarter revenue would decline as much as 8 percent and it trimmed its 2013 capital spending plans. Intel eked out a gain, up 0.07 percent at $21.93.

Shares of Texas Instruments, another chipmaker, shed 4.3 percent. Bank of America Corp, the last of the four big U.S. banks to report first-quarter results, said revenue fell. Its shares fell 4.7 percent.

"Banks are clearly struggling," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which has $760 billion in assets. "Loan growth has been disappointing, which points to economic growth not being robust."

MSCI's all-country world equity index, which tracks shares in 45 countries, dipped 1.3 percent to 355.34, reversing some of Tuesday's sharp gains.

European shares fell to their lowest in about four months. The broad FTSEurofirst 300 index fell for a fourth day, closing down 1.6 percent at 1,147.76. The euro zone's blue-chip Euro STOXX 50 index also retreated, falling 2.1 percent to 2,553.49.

Brent crude shed $2.22 to settle at $97.69 a barrel, while U.S. crude fell $2.04 to settle at $86.68 a barrel.

Bonds resumed gains as world shares and industrial commodities responded to the concerns about economic growth.

"Whether against stocks or commodities, the demand for Treasuries remains firm," said Ian Lyngen, a senior government bond strategist at CRT Capital Group in Stamford, Connecticut.

The benchmark 10-year U.S. Treasury note was up 7/32 in price to yield 1.6967 percent.

The euro suffered its biggest daily decline against the dollar in nearly a year, weakened by talk of a euro zone interest rate cut, while signs of economic malaise in Britain and Canada added to the U.S. currency's appeal.

The euro fell 1.1 percent to $1.3030 after hitting a seven-week high overnight, and was on track for its largest one-day slide since June.

The yen also slipped against the dollar, with officials at a weekend Group of 20 meeting in Washington not expected to scold Japan for a monetary policy that has led to a sharp slide in the currency.

The dollar rose 0.48 percent to 97.99 yen, although it remained below the four-year high of 99.94 yen set on Reuters data last week.

U.S. Comex June gold futures settled down $4.70 at $1,382.70 an ounce. Turnover was heavy as trading volume has exceeded its 30-day average, preliminary Reuters data showed.

Spot gold prices rose $6.27 to $1,374.00 an ounce.

Benchmark copper on the London Metal Exchange closed down 2.8 percent at $7,080.