* Slovak PM: Russia says gas to Europe via Ukraine could be
* U.S. stocks fall, smallcaps weak for third straight day
* U.S. 10-year yields tumble to lowest in six months
(Adds close of U.S. markets)
By Chuck Mikolajczak
NEW YORK, May 15 Global equity markets fell on
Thursday and safe-haven U.S. and German government bonds rose on
fears over escalation of the crisis between Russia and Ukraine
and in response to underwhelming U.S. and European economic
Slovak Prime Minister Robert Fico said Russia's Vladimir
Putin told multiple European states that Moscow will not supply
gas to Europe as of June 1 if Ukraine does not pay its bills.
Moscow and Kiev have taken tentative steps to resolve this
Natural gas futures rose 1.7 percent.
U.S. stocks fell as much as 1.4 percent on continued
weakness in small-caps. The Russell 2000 small-cap index
suffered a third straight decline for a total fall of 3.3
"I think (stocks) are starting to form a little bit of a
ceiling. Over the next four months it's going to work a lot
lower," said Uri Landesman, president at Platinum Partners in
European stocks closed down 0.8 percent after
rising to a six-year peak after data showed the euro zone
economy expanded slightly in the first three months of 2014 from
the last quarter of 2013, boosting expectations of stimulus from
the European Central Bank.
The MSCI world equity index fell 0.71
percent while bond prices in Spain, Italy and other peripheral
European nations fell sharply.
Yields on benchmark 10-year U.S. Treasury notes
fell as low as 2.47 percent, the lowest since Oct. 30. The U.S.
bond market rallied in tandem with Europe's, bolstered by weak
euro zone growth that further cemented expectations the ECB will
lower rates in June.
The Putin news along with weak U.S. industrial production
data and a fall in U.S. homebuilder sentiment stoked the
Also adding to investor skittishness were comments from
billionaire hedge fund manager David Tepper who said he was
"nervous" about the stock market at a conference on Wednesday
but said this was not the time to sell.
The Dow Jones industrial average fell 167.16 points
or 1.01 percent, to 16,446.81, the S&P 500 lost 17.68
points or 0.94 percent, to 1,870.85 and the Nasdaq Composite
dropped 31.33 points or 0.76 percent, to 4,069.29.
U.S. crude oil settled down 87 cents at $101.50 a
barrel, while Brent crude gained 25 cents to $110.44.
ECB President Mario Draghi signaled last week the bank was
poised to ease policy next month to support the euro zone
economy. Federal Reserve Chair Janet Yellen has also suggested
continued support for the U.S. economy.
The euro edged lower, down 0.04 percent at $1.3709
after hitting a low of $1.3647, while Germany's 10-year Bund
yield hit its lowest in a year at 1.30 percent.
(Additional reporting by Caroline Valetkevitch; Editing by Dan
Grebler and James Dalgleish)