* German exports post steepest drop in nearly a year
* North Korea conducts its largest nuclear test to date
* Increasingly risky to delay U.S. rate hike -Fed’s Rosengren (Updates with U.S. markets)
NEW YORK, Sept 9 (Reuters) - Stocks across the globe fell the most since June on Friday, weighed by German trade figures that cast doubt on the strength of the euro zone’s largest economy and by investor concern after North Korea conducted its fifth and most powerful nuclear test.
German exports fell sharply in July, shrinking the overall trade surplus for the fourth consecutive month - something not seen since 1992.
The euro peaked for the day shortly after the German data and later dipped below $1.12, while the benchmark U.S. Treasury yield touched its highest in 11 weeks.
Wall Street stocks were also hit after Boston Federal Reserve President Eric Rosengren said “risks to the forecast are becoming increasingly two-sided,” meaning that while a slowdown overseas remains a concern, the U.S. economy has proved resilient and could even overheat if Fed policy remains unchanged for too much longer.
“Certainly the posturing of the Fed is creating a lot of noise, and when you get comments like that, it creates a little bit of anxiety in the market,” said Phil Blancato, CEO of Ladenberg Thalmann Asset Management in New York.
North Korea conducted its fifth and biggest nuclear test on Friday and said it had mastered the ability to mount a warhead on a ballistic missile, ratcheting up a threat that its rivals and the United Nations have been powerless to contain.
U.S. President Barack Obama, aboard Air Force One on his way home from Laos, said the test would be met with “serious consequences.”
“The timing of North Korea flexing their nuclear muscles is interesting in that it comes on the heels of the leader of the free world’s trip to Asia,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
At 11:14 a.m. ET (1514 GMT), the Dow Jones industrial average was down 194.56 points, or 1.05 percent, to 18,285.35, the S&P 500 had lost 25.67 points, or 1.18 percent, to 2,155.63 and the Nasdaq Composite had dropped 60.77 points, or 1.16 percent, to 5,198.72.
Europe’s FTSEuroFirst 300 index of leading shares was down 1.1 percent, dragging it down 1.5 percent on the week. The Stoxx 600 index was down 0.4 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.4 percent, its biggest fall in over a month, after touching a 13-month high on Thursday. The decline shrank gains for the week to 1.5 percent.
Japan’s Nikkei closed flat after pulling back earlier on reports of the North Korean nuclear test . It was up 0.2 percent for the week.
The U.S. dollar rose after Rosengren’s remarks ratcheted expectations of a near-term increase in U.S. interest rates.
“Those hawkish comments from Rosengren helped the dollar; also in general the probability of a September hike has gone up a bit,” said Vassili Serebriakov, FX strategist at Credit Agricole in New York.
The dollar index, which tracks the U.S. currency against a basket of six currencies, rose 0.4 percent to 95.43, nearing its highest levels on Tuesday before a weak U.S. service sector report knocked the dollar 1 percent lower.
The euro fell 0.4 percent against the dollar to $1.1211.
U.S. Treasury yields, with long-dated maturities reaching more than two-month highs, in line with Japanese government bonds, after reports suggested the Bank of Japan is considering measures to cut short- to medium-term yields, while lifting those of long-term debt.
The U.S. Treasury market has been moving in tandem with JGBs over the last six months, analysts said, since Japanese investors of late have been the biggest buyers of U.S. government debt.
The U.S. yield curve reached its steepest level in three weeks at 85 basis points. That means the 10-year yield was 85 basis points higher than the two-year yield, a move driven by the jump in longer-dated borrowing costs.
Oil prices pulled back after surging more than 4 percent on Thursday. Brent fell 2.5 percent to $48.75, still up 4 percent this week, and U.S. crude retreated 2.4 percent to $46.48.
Gold was last at $1,334 an ounce, down 0.3 percent on the day but still up 0.7 percent this week, the biggest weekly gain in six.
Reporting by Rodrigo Campos, additional reporting by Chuck Mikolajczak, Gertrude Chavez-Dreyfuss and Dion Rabouin; Editing by Nick Zieminski
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