Global stocks slip, dollar gains on economy fears

By Herbert Lash

NEW YORK (Reuters) - Global stocks slid and the U.S. dollar rose on Friday as investors cut their exposure to risky assets amid signs of an anemic U.S. economic recovery.

Investors sought safe havens ahead of a holiday-shortened week in the United States and in anticipation of the year-end period, which can prove to be volatile.

Oil fell below $77, weighed by the stronger dollar, and falling stock prices raised worries about the economy and the outlook for energy demand.

Most U.S. Treasuries prices retreated as traders cut prices ahead of the auction of $118 billion next week. But demand for short-term debt before year's end pushed yields on the two-year note below 0.68 percent, their lowest since last December.

Yields on short-dated Treasury bills pushed below zero as investors clamored for low-risk investments on bets central banks will hold rates at ultra-low levels for a long time.

"People are getting out of risk, getting into Treasuries for the year-end, everybody is parking money," said James Combias, head of government bond trading at Mizuho Securities USA in New York.

U.S. gold futures ended higher for a sixth straight session despite the dollar's rise in a late session rally that could bode well for next week, traders said.

Equity markets around the world fell as investors took profits as the end of 2009 approaches. MSCI's all-country world index .MIWD00000PUS has gained more than 70 percent from March lows, and investors are leery of any signs of weakness as they seek to justify further advances in equity prices.