Global stocks down on Fed jitters

U.S. stocks fell on Friday and the euro slid to a six-week low against the dollar as euro zone debt fears came back to the fore,accelerating a flight from markets associated with optimism about economic growth.

After a good run,investors took what profits they could and stowed them in safe-haven assets such as the dollar and U.S. government bonds. The dollar .DXY,which has been debased by the Fed8217;s money printing,extended its recovery into a second week.

8220;What8217;s happened is people are saying,8217;Let me start taking some profits on these positions,and getting out of them,'8221; said Greg Salvaggio,senior vice president for capital markets at Tempus Consulting in Washington.

The fall in U.S. stocks capped a second week of losses,reflecting growing worries that stocks are on the precipice of a pullback.

The Dow Jones industrial average .DJI ended down 100.17 points,or 0.79 percent,at 12,595.75. The Standard amp; Poor8217;s 500 Index .SPX was down 10.88 points,or 0.81 percent,at 1,337.77. The Nasdaq Composite Index .IXIC lost 34.57 points,or 1.21 percent,to end at 2,828.47.

World stocks,as measured by the MSCI world equity index .MIWD00000PUS,fell 0.6 percent to 344.42,having earlier hit a more than three-week low. Thomson Reuters global stock index .TRXFLDGLPU dropped 0.8 percent.

The pan-European FTSEurofirst 300 .FTEU3 index ended down 0.4 percent. Emerging stocks .MSCIEF lost 0.3 percent.

8220;I think this is the first thrust in what8217;s likely to be a correction in the stock market,8221; said James Dailey,a portfolio manager at TEAM Asset Strategy Fund in Harrisburg,Pennsylvania. 8220;The epicentre of that correction is likely to be in what8217;s already been correcting most severely,which is the commodity-related area.8221;

GREECE RESTRUCTURING FEARS

The euro traded down against the dollar as investors8217; anxiety increased ahead of meetings of European policymakers next week. The euro is likely to remain pressured at least until after investors digest any outcome.

The euro fell as low as 1.4065 on trading platform EBS,the weakest since April 1. It was last down 0.9 percent at 1.4111.

A meeting of euro zone finance ministers is to be held on Monday,followed on Tuesday by a meeting of European Union finance ministers.

There are doubts as to whether a substantial agreement to help Greece manage its debts will emerge from the meetings,keeping uncertainty high over how long the country can avoid a restructuring. Concerns about Greece have pushed the euro down more than 5 percent from a peak near 1.4940 hit in early May.

8220;There is growing speculation that Greece will need to restructure its debt arrangements and that will cause significant turmoil and hardship for the euro,8221; Tempus Consulting8217;s Salvaggio said. 8220;If Greece restructures,Portugal will likely be next,Ireland shortly behind them,and then the worst-case scenario is Spain.8221;

Oil fell early as the dollar strengthened,but crude managed to stage a rebound before the U.S. market close,helped by short-covering ahead of the weekend.

Brent crude rose 85 cents to settle at 113.83 a barrel after hitting as high as 114.92 earlier. U.S. crude traded up 68 cents at 99.65 a barrel.

The strength in the dollar also hit gold. Spot gold fell 0.7 percent to 1,492.50 an ounce,having earlier risen as high as 1,516.40. U.S. gold futures for June delivery settled down 13.20 at 1,493.60.

U.S. Treasuries prices rose,helped by stock losses,Fed purchases of Treasuries and relief that U.S. inflation data did not come in above forecast.

Investors8217; preference for safety helped push benchmark U.S. 10-year Treasury notes up 12/32 in price,with yields easing to 3.18 percent from 3.23 percent on Thursday.

Benchmark yields remain not far above the five-month low of 3.13 percent reached last week.