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NEW YORK (Reuters) - Global stock markets fell on Monday as slowing factory activity in China and Europe added to worries about weaker global growth and Apple shares dropped, while the yen briefly hit a seven-year low after Moody's cut its rating on Japan.
Oil prices rebounded sharply after hitting five-year lows, lifted by data suggesting that tumbling prices may have started affecting drilling activity in the fast-growing U.S. shale oil industry.
On Wall Street, Apple (AAPL.O) shares were down 2.4 percent after dropping as much as 6 percent, and the stock was the most actively traded on Nasdaq. The cause of the decline was not yet clear, though traders pointed to high-speed algorithmic trading programs as a potential culprit. Shares of U.S. retailers declined after Thanksgiving weekend in-store sales failed to impress. The S&P 500 retail index .SPXRT was down 1 percent.
The day's data added to investor caution. Chinese purchasing managers (PMI) data showed manufacturing slowed in November, suggesting the world's second biggest economy was continuing to lose momentum. Factory activity also slowed in France and Germany.
"The places where we are seeing strength are in the more defensive areas of the (stock) market. That's tied to the perceived weakness in global growth," said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey.
The U.S. dollar rose to its highest level against the yen since July 2007, hitting 119.15 yen JPY=EBS on the EBS trading platform, immediately after Moody's lowered its rating on the world's third biggest economy by a notch to A1 from AA3, citing Japan's fiscal problems. The dollar ran into profit-taking and was last trading at 118.20 yen, down 0.4 percent on the day.
The Dow Jones industrial average .DJI fell 18.28 points, or 0.1 percent, to 17,809.96, the S&P 500 .SPX lost 10.12 points, or 0.49 percent, to 2,057.44, and the Nasdaq Composite .IXIC dropped 48.65 points, or 1.02 percent, to 4,742.98.
MSCI's global share index .MIWD00000PUS was last down 0.5 percent. European shares .FTEU3 ended down 0.5 percent. Emerging market shares tracked by MSCI .MSCIEF fell 1.7 percent.
World oil prices are down 40 percent since June, largely on abundant supply. OPEC last week declined to cut production to raise prices. But with data suggesting that lower prices may have started to affect drilling activity in the U.S. shale oil industry, there are signs supply could be affected.
Brent crude LCOc1 fell as low as $67.53 a barrel, its lowest level since October 2009, before reversing course to rise to $72.40, up $2.25. U.S. crude oil CLc1 was up $2.61 at $68.76.
U.S. Treasuries extended a six-session rally, buoyed on the worries about global growth.
The benchmark 10-year Treasury note US10YT=RR was up 5/32 to 100.25 in price to yield 2.1762 percent versus 2.196 percent on Friday.
"The news overseas has been bullish for Treasuries," said Jake Lowery, a portfolio manager at Voya Investment Management in Atlanta. "The weaker numbers out of Germany and the downgrade of Japanese government has put some pressure on risk markets."
Gold rebounded sharply from a 2 percent loss posted earlier. Spot gold XAU= was up 2.4 percent at $1,194.98.
Additional reporting by Nigel Stephenson in London, and Rodrigo Campos, Michael Connor and Barani Krishnan in New York; Editing by Leslie Adler