* Worst two-day loss for gold in 30 years
* China Q1 GDP, industrial output undershoot forecasts
* Wall Street, oil also pulled lower; yen gains broadly
By Leah Schnurr
NEW YORK, April 15 (Reuters) - Investors dumped commodities
and stocks on Monday in a broad selloff that gave gold its worst
two-day loss in 30 years after weak demand figures from China
fanned concerns the world economy is stumbling.
Gold dragged other metals lower as its price plunged to a
more than two-year low. Brent crude fell towards $100 a barrel,
while on Wall Street stocks dropped more than 2 percent for the
S&P 500's worst day since Nov. 7.
With the market already vulnerable, U.S. stocks extended
losses late in the session after two explosions struck near the
Boston Marathon finish line. Boston police said
the blasts killed two people and injured 23.
Spot gold dropped as much as 9 percent on Monday
alone, falling as low as $1,336.04 an ounce. In the last two
sessions gold has fallen over 13 percent, for the worst two days
since late February 1983. Gold was recently at $1,346.26.
Strategists have cited various reasons for gold's slump,
including plans by Cyprus to sell excess gold reserves and
feared selling from other central banks.
The already sharp correction has caused short-term investors
to flee the asset. The SPDR Gold Trust hit its highest
ever daily volume with 92.44 million shares traded. The ETF lost
8.8 percent.
"The pressure from the proposed sale of Cyprus gold is one
of the factors, and once one of them starts, they all run from
the hen house," said Robert Richardson, senior account executive
and trading officer at Canadian broker-dealer W.D. Latimer Co.
Ltd.
China's recovery unexpectedly stumbled in the first three
months of 2013, as it reported its annual growth rate eased to
7.7 percent from 7.9 percent in the final quarter of last year.
Economists had forecast 8 percent growth.
Industrial output in China in March also undershot
expectations and added to investor sensitivity after recent
disappointing economic data out of the United States.
A U.S. regional manufacturing report on Monday showed the
pace of growth slowed, the latest data to suggest the world's
biggest economy lost some steam heading into the second quarter.
"China makes up 40 percent of demand for base metals and all
the growth in demand for oil is coming from the developing
world, so to see weakness in China is bad for commodities
generally," said Nic Brown, head of commodities research at
Natixis (Paris: FR0000120685 - news) in London.
Last week Cyprus revealed it would sell around 400 million
euros worth of gold to help shore up its ailing finances and the
move has sparked suggestions that larger countries in the region
could use the move to cash in on some huge jumps gold has seen
over the last decade.
Traders also cited concern that the Federal Reserve might
reduce U.S. monetary stimulus towards the end of the year.
"If we see this kind of liquidation again, the equity market
will follow. Then we'll have a real problem," said Frank Cholly,
Jr., senior commodities broker at R.J. O'Brien and Associates in
Chicago.
"If we turn into a bear market and this isn't just a
correction, sentiment may really sour. There is no one buying
and picking a bottom yet."
Brent crude futures dropped more than $2 to $100.39
a barrel as the disappointment stirred already festering global
recovery concerns. U.S. crude settled down $2.58 at
$88.71.
Copper fell to its lowest in 1-1/2 years. Three-month copper
on the London Metal Exchange fell to $7,085 a tonne in
intraday trade, its lowest since October 2011.
Silver lost 12 percent at $22.71 an ounce, having
fallen as low as $22.56.
U.S. stocks also fell heavily across the board.
"The adverse feedback loop of all these things ... that's
spilling over to stocks and that's something most investors
don't want to get in front of. So we've seen selling really
dominate the day today," said Bucky Hellwig, senior vice
president at BB&T Wealth Management in Birmingham, Alabama.
The Dow Jones industrial average dropped 265.86
points, or 1.79 percent, to close at 14,599.20. The Standard &
Poor's 500 Index lost 36.49 points, or 2.30 percent, to
end at 1,552.36. The Nasdaq Composite Index fell 78.46
points, or 2.38 percent, to 3,216.49.
The FTSEurofirst 300 ended down 0.6 percent and
MSCI (NYSE: MSCI - news) 's world share index, which tracks stocks in
45 countries, lost 1.8 percent.
The yen rose as traders sold riskier investments funded by
the cheap Japanese currency. The dollar fell 1.2 percent
to 96.61 yen. The euro fell 2.2 percent to 125.98
yen.
