GLOBAL MARKETS-Shares weak after U.S. data, but oil rebounds

Thu Apr 18, 2013 2:57pm EDT

* European shares end flat, U.S. shares drop

* Philly Fed data the latest data implying weakness

* Crude oil rebounds after extended period of declines

* Spain sees successful debt sale on rate cut hopes

By Ryan Vlastelica

NEW YORK, April 18 (Reuters) - Stock markets around the world were volatile on Thursday, with U.S. stocks down following weak data on factory activity, the latest in a series of indicators pointing to weak growth, while Europe was flat near its lowest levels of the year.

Early U.S. stock trading indicated a rebound following a steep decline in Wednesday's session, but turned lower following the data. Crude oil rebounded, though it remains sharply lower on the week.

With the decline, U.S. shares extended their drop on the week and the S&P broke under its 50-day moving average for the first time this year, a signal that the market's uptrend could be in peril. The S&P 500 is on pace to post its worst week since June 2012, though it remains up 8.1 percent for 2013.

Meanwhile, the Dow is down 2.2 percent on the week, and up 11 percent on the year.

Growth in factory activity in the U.S. mid-Atlantic region unexpectedly slowed in April, according to the Philadelphia Federal Reserve, the latest in a series of data pointing to weak economic conditions.

"We're seeing slowing demand and lackluster economic data, which is causing analysts and economists to revise their growth outlooks for the year," said Mark Martiak, senior wealth strategist at Premier/First Allied Securities in New York.

Investors also looked to the latest corporate earnings reports for signs on the economy's strength, but results were mixed. Verizon Communications shares surged 3.5 percent following a better-than-expected profit while Morgan Stanley slumped 4.7 percent as revenue from commodities trading fell sharply. UnitedHealth Group dropped 3.7 percent as earnings fell, pressuring insurance companies.

The Dow Jones industrial average was down 82.90 points, or 0.57 percent, at 14,535.69. The Standard & Poor's 500 Index was down 10.50 points, or 0.68 percent, at 1,541.51. The Nasdaq Composite Index was down 37.62 points, or 1.17 percent, at 3,167.05.

Europe's broad FTSE Eurofirst 300 index ended flat near its lowest point of 2013. Frankfurt's DAX fell 0.4 percent while the Paris CAC-40 edged 0.1 percent higher. The euro rose 0.2 percent but remained vulnerable after falls the previous day on talk of more monetary easing by the European Central Bank.

Earlier, Japan's Nikkei average sank 1.2 percent and MSCI's index of Asia-Pacific shares outside Japan fell 0.6 percent, leaving the MSCI world equity index down 0.3 percent.

Surprisingly weak economic data from China and the United States, and the International Monetary Fund's decision to trim its global growth forecast, have driven the recent equity market falls, offsetting support from easier global central bank policies.

Some analysts say the market move is more a timely correction after strong gains in the first quarter of the year, when optimism over the U.S. economy lifted Wall Street stocks to record peaks and boosted European shares to multi-year highs.

U.S. Treasury bonds gained as the soft economic data and losses in the stock market kept up investors' demand for safe-haven investments. The benchmark 10-year U.S. Treasury note was up 3/32, with the yield at 1.6864 percent.

COMMODITIES STRUGGLE FOR GROUND

The prospect of lower global growth, and with it weaker demand for goods used in industrial production, has weighed heavily on the commodity markets where copper and oil are near multi-month lows.

Copper, seen as a gauge for manufacturing and China-related growth, briefly broke below $7,000 a tonne for the first time since late 2011 but later rebounded, up 0.2 percent to $7,092 a tonne.

Investors sought bargains in oil, sending Brent crude up 1.7 percent after recently touching its lowest levels since last July. U.S. crude was up 1.5 percent, though it remains sharply down on the week.

Gold rose 0.8 percent, on track for its third daily rise. Still, following a massive plunge on Monday, it is down more than 6 percent this week.

"Investors who value physical gold over paper gold, have viewed these low prices as a buying opportunity," said Edmund Moy, chief strategist at gold provider Morgan Gold, adding that sales of new gold coins from the U.S. Mint had jumped in April.

SPAIN SELLS NEW BONDS

In Europe's debt markets, investors shrugged off the growth worries and instead focused on the likelihood they would prompt a rate cut by the region's central bank.

The better tone allowed Spain to sell 4.7 billion euros ($6.1 billion) of new bonds at lower borrowing costs than at recent auctions as investors snapped up the high-yielding debt.

"Today's well-received auction ... underscores the extent to which peripheral euro zone debt markets are almost immune from growing concerns about economic growth," said Nicholas Spiro, managing director of consultancy firm Spiro Sovereign Strategy Ltd.

German Bund futures were flat at 146.22 after the debt sale, but were supported by the expectations of loose central bank monetary policy.

Demand rose on Wednesday after comments from European Central Bank policymaker Jens Weidmann, who stoked a belief that interest rates could fall if economic data remains weak.

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