* Global stocks slip on nagging worries about economy
* Oil falls to close to $60 a barrel on recovery doubts
* Bonds gain on equity sell-off, strong demand at auction
* Yen climbs broadly as carry trade unwinds (Adds close of U.S. markets)
By Herbert Lash
NEW YORK, July 8 (Reuters) - Oil slid more than 4 percent on Wednesday and the yen soared broadly in its biggest jump in months as new signs and related news of tepid economic activity spurred risk aversion and the appeal of government debt.
Strong demand for the U.S. Treasury's latest sale of 10-year notes offered fresh evidence of the desire by both foreign and domestic investors for U.S. debt in an uncertain economic climate that is hanging like a pall over markets.
Concerns about a recovery also could be seen with investors questioning whether China will be a driver of global growth considering the eruption of Chinese ethnic unrest.
U.S. equities pared most of their losses late in the
session as investors hoped that corporate results would top
estimates as the quarterly earnings season kicked off. Aluminum
producer Alcoa Inc
Sentiment was still broadly negative, with declining issues outpacing advancing issues by almost 2 to 1 on the New York Stock Exchange.
Global stocks declined. MSCI's all-country world index <.MIWD00000PUS> fell almost 1 percent.
The Dow Jones industrial average <.DJI> closed up 14.81 points, or 0.18 percent, at 8,178.41. The Standard & Poor's 500 Index <.SPX> fell 1.47 points, or 0.17 percent, at 879.56. The Nasdaq Composite Index <.IXIC> was up 1.00 points, or 0.06 percent, at 1,747.17.
Gains in the yen accelerated after it broke through key technical levels, traders said, leading investors to reverse trades where they had borrowed in yen to buy higher-yielding currencies.
"It's a risk-driven market and risk is in the process of being unwound," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.
The euro fell more than 3 percent to a low of 127.05 yen
It was the biggest one-day move in the euro against the yen since November and the biggest one-day move by the dollar against the yen since March.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 0.03 percent at 80.681.
Against the yen, the dollar
The drop in crude prices triggered a sell-off in other
commodities, with tin
U.S. crude
London Brent crude
"Distillate stocks are showing signs that the economy has not had any real improvements yet," said Mike Zarembski, senior commodities analyst at optionsXpress in Chicago.
U.S. government bond prices shot up and pushed benchmark yields to 6-1/2 week lows after the Treasury sold $19 billion of 10-year debt without the slightest hitch.
Despite oft-stated concerns about the amount of debt the U.S. Treasury must sell to finance efforts to end a deep recession and fund various financial rescues, risk-averse investors beat a path to the government's latest auction.
Demand was firmer than people had expected, said David Dietze, chief investment strategist at Point View Financial Services in New York.
"Basically the fear trade is raising its head," Dietze said.
Unease over the economic outlook was driven in part by an International Monetary Fund report that said the global economy is likely to contract 1.4 percent this year, more than the 1.3 percent decline it projected in April. [ID:nN08376464]
U.S. government debt shot higher. The benchmark 10-year
U.S. Treasury note
U.S. government weekly data that showed gasoline stocks had risen by 1.9 million barrels, more than expectations for a 600,000 barrel increase, also bolstered the view that the U.S. economy was far from rebounding. [EIA/S]
Distillate stocks, including diesel, climbed 3.7 million barrels, compared with an expected two million barrel rise, to their highest level in nearly 25 years. [ID:nSP441411]
"Oil data from the United States were very bearish today and that reinforced the negative sentiment for industrial commodities," said Justin Lennon, a copper analyst at Mitsui Bussan Commodities in New York.
Copper for September delivery
European shares fell for the fifth straight session as investors fretted over further signs that the pace of economic recovery will not be fast. [ID:nL8678007]
The FTSEurofirst 300 <.FTEU3> index of top European shares closed 1.1 percent lower at 817.12 points. The FTSE 100 <.FTSE> closed down 46.77 points at 4140.23, its third day of losses.
The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> dropped 1.2 percent to a two-week low, while Japan's Nikkei <.N225> slid for a sixth straight trading day, off 2.4 percent. (Reporting by Rodrigo Campos, Richard Leong, Ellen Freilich and Nick Olivari in New York; Martina Fuchs, Christopher Johnson, David Brett, Barbara Lewis, Michael Taylor and Kylie MacLellan in London; writing by Herbert Lash, Editing by Chizu Nomiyama)