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World shares sink over Japan worries

New York - World stocks fell to six-week lows on Monday on fears over the global economic impact from Japan's devastating earthquake and tsunami and as officials grappled with a nuclear crisis.

Oil prices zigzagged on supply concerns due to the growing unrest in a Yemeni area bordering Saudi Arabia, the world's largest oil exporter, and as investors weighed the effects of the Japan crisis.

Japanese stocks posted their biggest daily decline since October 2008 in heavy volume. The benchmark Nikkei index closed off 6.2% and the broader TOPIX index slumped 7.5%.

"The earthquake could have great implications on the global economic front," said Andre Bakhos, director of market analytics at Lek Securities in New York. "If you shut down Japan, there could be a global recession."

Japanese gross domestic product may slide by 1 trillion yen in 2011, or about 0.2% point, Hiromichi Shirakawa, a Tokyo-based economist at Credit Suisse, said in a client note. But deteriorating consumer confidence and production cuts could worsen the GDP drop as much as 1% point, he added.

The US dollar rebounded from near-record lows against the yen after the Bank of Japan announced a series of policy easing measures to shore up the economy.

Gold recovered some of last week's losses as Japan's distress added to upward pressure on the metal, driving prices toward recent record highs.

The MSCI world equity index fell 0.9% to levels last seen in late January. It is down more than 4% from its February peak. The Thomson Reuters global stock index shed 1.1%.

European and US stocks tumbled on fears that Japan's crisis could derail a global recovery.

Emerging market equities were lifted by construction and refinery shares on expectations of large-scale reconstruction efforts in Japan as the country confronted what officials there called its biggest crisis since World War Two.

The FTSEurofirst 300 index dropped 0.9%, while emerging markets stocks rose 0.6%.

The Dow Jones industrial average fell 87.19 points, or 0.72%, to 11 957.21. The Standard & Poor's 500 Index declined 10.58 points, or 0.81%, to 1 293.70 and the Nasdaq Composite Index slipped 19.78 points, or 0.73%, to 2 695.83.

The iShares MSCI Japan index exchange-traded fund tumbled 7.9%, and the Global X Uranium ETF dropped 18.5%.

Brent crude edged lower by 0.7% to $113.15 a barrel, while US crude oil fell 1.2% to about $100 on concerns of a short-term hit to demand in Japan, the world's third-largest oil consumer. Conflicts in Libya and Yemen continued to be eyed by traders.

The dollar index, a gauge of the greenback against a basket of currencies, fell 0.4%. The euro was up 0.4% at $1.3962 after European Union policymakers surprised markets over the weekend by reaching significant agreements ahead of the March 24-25 heads of state meeting.

The Japanese yen declined 0.12% to 81.79. The dollar rebounded from a four-month low against the currency as the Bank of Japan supplied banks with record funds to stabilize the stricken economy.

Most US Treasury debt prices rose on Monday as investors looked for lower-risk assets while trying to gauge the eventual impact of the Japanese disaster and watching turmoil in the Middle East and North Africa. Benchmark 10-year US Treasury yields fell 0.05% percentage point to 3.35%.

Spot gold prices rose $9.20, or 0.65%, to $1 426.20 an ounce.

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