GLOBAL MARKETS-Bank troubles hit world stocks, dollar up
* MSCI world equity index under pressure on bank worries
* Dollar hits one-month high ahead of Fed meeting
* Gold soars to record as India central bank buys from IMF (Updates with U.S. markets activity, changes dateline; previous LONDON)
NEW YORK, Nov 3 (Reuters) - Investors scrambled for safety on Tuesday, driving world stocks lower and propelling safe-haven bids for government bonds and the dollar on poor results from UBS (UBSN.VX) and a shake-up of UK banks Lloyds (LLOY.L) and Royal Bank of Scotland (RBS.L).
UBS shares were down nearly 6 percent following news the Swiss bank suffered a larger-than-expected asset outflow in the third quarter For more, see: [nL2713325]. Lloyds shares were under pressure after it launched a record 13.5 billion pound ($22 billion) rights issue. Along with RBS, it agreed to sell off businesses as part of a deal to limit reliance on government support. [nL3540088]
Adding to the sector's problems, the European Commission said results of stress tests on euro zone banks showed losses could amount to 400 billion euros ($590.9 billion) in 2009-2010. [nL3566693]
"Equity market setbacks have a propensity to re-ignite risk aversion investment activity," said Tom Sowanick, co-president and chief investment officer of Omnivest Group.
World stocks as measured by MSCI .MIWD00000PUS fell 0.65 percent. The index rallied by 75 percent between early March and late October on growing optimism over the global economy, but fell 4 percent last week.
The FTSEurofirst 300 .FTEU3 index of top European shares was down 1.16 percent, losing ground for the sixth time in nine sessions. Riskier emerging market shares .MSCIEF fell 1 percent.
U.S. equities were down across the board.
The Dow Jones industrial average .DJI was down 32.80 points, or 0.34 percent, at 9,756.64, while the Standard & Poor's 500 Index .SPX was down 1.64 points, or 0.16 percent, at 1,041.24. The Nasdaq Composite Index .IXIC was down 4.93 points, or 0.24 percent, at 2,044.27.
Gold, which typically benefits during periods of uncertainty for economic growth and financial markets, jumped to a record, but not on risk-aversion trades.
Spot gold prices XAU= hit a record $1084.70 following news that India's central bank bought 200 metric tons of the metal from the International Monetary Fund, heightening speculation that there may be more official purchases.
In mid-afternoon trading, gold rose $24.75, or 2.34 percent, to $1083.60.
INVESTORS HIDE IN DOLLARS Continued...
