* Japan stocks in biggest decline since October 2008
* U.S., European shares fall on fears over global recovery
* Emerging market stocks up on rebuilding hopes
* Dollar falls against yen; gold ticks up
(Updates with New York close)
By Al Yoon
NEW YORK, March 14 World stocks slid to
six-week lows on Monday and the yen rose as the devastating
toll from Japan's earthquake unfolded, raising fears of the
impact on industries ranging from insurance to nuclear power.
The dollar fell against the yen and was seen testing the
record low hit in 1995 as Japanese insurers and companies
repatriated funds to help pay for claims and reconstruction.
Japanese stocks posted their biggest daily decline since
October 2008 in record volume as traders considered economic
losses in the world's third largest economy. The Nikkei index
.N225 closed off 6.2 percent and the broader TOPIX index
.TOPX slumped 7.5 percent.
The earthquake -- with many global companies facing
disruptions after the destruction of vital infrastructure,
damaged ports and factory shutdowns -- triggered worries that
global growth would suffer a setback just as the world economy
is emerging from the effects of the financial crisis. Japan's
recovery costs could top $180 billion, or 3 percent of its
annual economic output and more than 50 percent higher than the
costs of the 1995 earthquake in Kobe, economists said.
"The earthquake could have great implications on the global
economic front," said Andre Bakhos, director of market
analytics at Lek Securities in New York. "If you shut down
Japan, there could be a global recession."
Japanese gross domestic product may slide by 1 trillion yen
in 2011, or about 0.2 percentage point, Hiromichi Shirakawa,
chief economist for Japan at Credit Suisse, said in a client
note. But deteriorating consumer confidence and production cuts
could worsen the GDP drop as much as 1 percentage point, he
Before the disaster, Shirakawa estimated Japan's growth
would slow to 1.4 percent this fiscal year from 3 percent in
Gold rose, recovering some of last week's losses, as the
Japanese quake and heightened political unrest in the Middle
East and North Africa drove safe-haven buying, driving prices
toward recent record highs.
The MSCI world equity index .MIWD00000PUS traded down
0.72 percent to levels last seen in late January. It is down 4
percent from its February peak. The Thomson Reuters global
stock index .TRXFLDGLPU shed 1 percent.
Emerging market equities were lifted by construction and
refinery shares on expectations of large-scale reconstruction
efforts in Japan as the country confronted what officials there
called its biggest crisis since World War Two. For details see
The pan-European FTSEurofirst 300 index .FTEU3 dropped
1.2 percent, while emerging markets stocks .MSCIEF rose 0.8
The Dow Jones industrial average .DJI dropped 51.24
points, or 0.43 percent, to 11,993.16. The Standard & Poor's
500 Index .SPX declined 7.89 points, or 0.6 percent, to
1,296.39 and the Nasdaq Composite Index .IXIC fell 14.64
points, or 0.54 percent, to 2,700.97.
Shares pared losses on expectations that the broad impact
on equities would be short-lived.
Among shares most affected were those in the nuclear
industry after explosions and damage at Japanese nuclear plants
created doubts about the prospects of the industry. A second
hydrogen explosion rocked a stricken nuclear power plant in
Japan, sending authorities scrambling to avert a meltdown.
Industrial conglomerates were the largest contributors to
the S&P 500 decline, while oil and gas firms buoyed the index.
General Electric Co (GE.N) which has combined nuclear ventures
with Hitachi Ltd (6501.T), fell 2.2 percent to $19.92.
Aflac Inc (AFL.N), the largest foreign insurer in Japan,
fell 3 percent to $53.90 as experts estimated that the
devastating earthquake in Japan could cost the insurance
industry nearly $35 billion, making it one of the most
expensive disasters ever.
Shares of luxury goods companies worldwide were also hit on
worries about a drop in retail demand from Japan, which is the
third largest market for luxury goods, accounting for 11
percent of lgobal luxury sales.
Tiffany (TIF.N) shares fell 5.3 percent and Coach (COH.N)
declined 5.3 percent. In Europe, LVMH slipped 3.1 percent,
Hermes (HRMS.PA) fell 3.1 percent, Richemont CFR.VX 2
percent, and PPR (PRTP.PA), which owns Gucci and Yves Saint
Laurent, lost 2.5 percent.
The iShares MSCI Japan index exchange-traded fund (EWJ.P)
tumbled 7 percent, and the Global X Uranium ETF (URA.P) dropped
Brent crude LCOc1 edged down 0.2 percent to $113.64 a
barrel, pressured by expectations that oil demand in Japan, the
world's third-largest oil consumer, would fall as economic
activity stalls following the quake. But conflicts in Libya and
Yemen continued to be eyed by traders and offset the selling
In New York, U.S. crude oil 2CLc1 erased earlier losses
to rise 3 cents, or 0.03 percent, to settle at $101.19 a
The dollar index .DXY, a gauge of the greenback against a
basket of currencies, fell 0.6 percent. The euro gained 0.65
percent at $1.3997 EUR= after European Union policymakers
surprised markets over the weekend by reaching significant
agreements ahead of the March 24-25 heads of state meeting.
Against the Japanese yen, the dollar declined 0.24 percent
to 81.69 yen on the repatriation bets. The dollar earlier had
hit a four-month low against the yen, less than a yen from the
1995 record low, but pared losses as the Bank of Japan supplied
banks with record funds to stabilize the stricken economy.
Most U.S. Treasury debt prices rose on Monday as investors
looked for lower-risk assets while trying to gauge the eventual
impact of the Japanese disaster and watching political turmoil
in the Middle East and North Africa. Benchmark 10-year U.S.
Treasury yields plumbed their lowest levels since January,
falling 0.03 percentage point to 3.37 percent.
Spot gold prices rose $6.39, or 0.45 percent, to $1,423.30
(Additional reporting by Edward Krudy, Steven C. Johnson,
Robert Gibbons and Phil Wahba in New York and Japanese markets
reporters; Editing by Leslie Adler)