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NEW YORK (Reuters) - World 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 hit a seven-year low against the dollar before recovering.
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. Gold posted its biggest daily gain in more than a year.
On Wall Street, the S&P 500 suffered its biggest one-day drop in more than a month. Apple (AAPL.O) was the biggest drag on the S&P 500 and the most actively traded on Nasdaq. Apple ended down 3.2 percent after dropping as much as 6 percent. The cause of the decline was not clear, though traders pointed to high-speed algorithmic trading programs as a potential culprit.
Shares of U.S. retailers fell, after Thanksgiving weekend in-store sales failed to impress. The S&P 500 retail index .SPXRT lost 1.5 percent.
The day's data added to investor caution. Chinese purchasing managers 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.
In the United States, growth in the manufacturing sector slowed for a third straight month in November.
"We're watching growth struggle, especially outside the United States," said Mark Martiak, senior wealth strategist at Premier Wealth/First Allied Securities in New York. "Investors may be overly complacent."
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 Japan, the world's third biggest economy, by a notch to A1 from AA3, citing fiscal problems. The dollar ran into profit-taking and was last down 0.3 percent at 118.29 yen.
The Dow Jones industrial average .DJI fell 51.44 points, or 0.29 percent, to 17,776.8, the S&P 500 .SPX lost 14.12 points, or 0.68 percent, to 2,053.44, and the Nasdaq Composite .IXIC dropped 64.28 points, or 1.34 percent, to 4,727.35.
MSCI's global share index .MIWD00000PUS was down 0.7 percent. European shares .FTEU3 ended down 0.5 percent. Emerging market shares tracked by MSCI .MSCIEF fell 1.8 percent.
World oil prices are down roughly 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 fall.
Brent crude LCOc1 fell as low as $67.53 a barrel, its lowest level since October 2009, before reversing course to settle at $72.54, up $2.39. U.S. crude oil CLc1 rose $2.85 to settle at $69.00.
In the precious metals market, spot gold XAU= was up 4.2 percent at $1,216.34.
U.S. Treasuries ended a six-session rally, falling on profit-taking with investors anxious ahead of Friday's monthly U.S. employment report. The benchmark 10-year Treasury note US10YT=RR was last off 6/32 in price and yielding 2.2165 percent versus 2.196 percent on Friday.
"We have had a pretty good run-up," said David Coard, head of fixed-income trading at Williams Capital Group in New York. "That often results in people taking profits, or they might think Treasuries are a little rich and may be selling short."
Additional reporting by Ryan Vlastelica and Michael Connor in New York; Editing by Leslie Adler