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GLOBAL MARKETS-Stocks slip on Bernanke, oil rallies after OPEC

Published 06/08/2011, 10:18 AM
Updated 06/08/2011, 10:20 AM

* Fed chief plays down chances of further stimulus

* U.S., European shares fall on Bernanke disappointment

* Oil prices advance after OPEC fails to lift output (Adds quote, detail, updates prices;, changes dateline, previous LONDON, and byline)

By Wanfeng Zhou

NEW YORK, June 8 (Reuters) - Major stock markets fell on Wednesday and the U.S. dollar hit a one-month low against the yen as investors grew increasingly worried about the implications of a bleak outlook for the global economy.

Crude oil prices rose, reversing earlier losses after OPEC talks broke down without reaching an agreement to increase output as Saudi Arabia failed to convince members to lift production. For more, see [ID:nN08221648]

Bernanke on Tuesday acknowledged that the U.S. economy had slowed but offered no hint that the central bank is considering further stimulus to support growth. His comments, combined with recent weak U.S. labor and manufacturing data, stoked fears that a slowdown in the world's largest economy could dent global growth. For more, see [ID:nW1E7GV010]

"The question marks regarding the growth dynamics for the global economy are becoming bigger and this is weighing on the markets," said Tammo Greetfeld, equity strategist at UniCredit.

World stocks as measured by the MSCI world equity index <.MIWD00000PUS> slipped 0.7 percent. The Thomson Reuters global stock index <.TRXFLDGLPU> also lost 0.7 percent. Emerging market stocks <.MSCIEF> fell 0.8 percent.

The Dow Jones industrial average <.DJI> was down 15.44 points, or 0.13 percent, at 12,055.37. The Standard & Poor's 500 Index <.SPX> was down 3.04 points, or 0.24 percent, at 1,281.90. The Nasdaq Composite Index <.IXIC> was down 15.04 points, or 0.56 percent, at 2,686.52.

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The FTSEurofirst 300 <.FTEU3> index of top European shares was down 1 percent at 1,092.61 points, plumbing a two-and-a-half month low and a sixth straight day of losses.

The dollar was last down 0.3 percent at 79.88 yen

Brent crude oil was last up $1.08 at $117.81 a barrel. U.S. crude rose $1.14 to $100.33 a barrel.

Secretary General Abdullah El-Badri said the effective decision was no change in policy and that OPEC hoped to meet again in three months time to assess the situation. [ID:nOPC000072]

"I do not think it is a surprise, but it is a supportive factor and I think this will get us back up to $100 and pivot around there until something else happens," said Chris Dillman, an analyst at Tradition Energy in Stamford, Connecticut.

DATA, GREECE HIT EURO

The euro

Weaker-than-expected German data and uncertainty over whether European policymakers will manage to pin down a deal for further financial aid for Greece hampered sentiment.

German exports posted their biggest drop in more than two years in April and industry output fell 0.6 percent, confounding expectations for an unchanged reading, data showed on Wednesday. See [ID:nLDE7570B7] [ID:nLDE75706Q]

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Greece needs substantial fresh aid from the euro zone to avoid the currency bloc's first state insolvency, a German newspaper reported on Tuesday, citing German Finance Minister Wolfgang Schaeuble. [ID:nB4E7G900O]

The cost of insuring Greek and Portuguese debt against default rose, while the premium investors demand to hold Greek, Portuguese and Irish government bonds rather than benchmark German Bunds rose.

German government Bunds rose around 13 ticks , though outperformance in U.S. Treasuries overnight saw the yield on 10-year U.S. paper fall to 9 basis points below that of Bunds.

U.S. benchmark Treasury yields fell back below the key three percent level as worries over the tepid pace of economic growth spurred investors to buy into lower-risk assets.

Yields on 10-year notes

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