Stocks fall on Fed concerns; U.S. oil jumps 8.8 pct

By Caroline Valetkevitch

NEW YORK (Reuters) - World stock indexes fell on Monday as a Federal Reserve official's comments added to investor concerns the bank may start raising interest rates in September, while oil prices jumped more than 8 percent, extending their biggest price surge in 25 years.

The S&P 500 registered its biggest monthly percentage drop since May 2012 after being pummelled in the past two weeks on concerns about slowing growth in China.

U.S. crude oil futures jumped 8.8 percent, helped by a downward revision of U.S. crude production data and OPEC's readiness to talk with other producers.

Weekend comments from Federal Reserve policymakers, which left the door open to a U.S. rate rise as soon as next month, added to recent stock market jitters.

 

Fed Vice Chairman Stanley Fischer said in a speech at the annual Jackson Hole, Wyoming, central bankers' symposium that U.S. inflation was likely to rebound, allowing rates to rise gradually.

"If they move in September, it's going to cast a lot of doubt about where they will stop," said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco.

The Dow Jones industrial average <.DJI> fell 114.98 points, or 0.69 percent, to 16,528.03, the S&P 500 <.SPX> lost 16.69 points, or 0.84 percent, to 1,972.18 and the Nasdaq Composite <.IXIC> dropped 51.82 points, or 1.07 percent, to 4,776.51.

The Dow, down 6.6 for August, registered its worst monthly percentage decline since May 2010. The Nasdaq, off 6.9 percent for August, and the S&P 500, down 6.3 percent, both posted their worst months since May 2012.

MSCI's all-country stock index <.MIWD00000PUS> lost 0.7 percent and was down 7 percent for the month, also the worst monthly drop since May 2012.

The pan-European FTSEurofirst 300 stocks index <.FTEU3> closed down 0.2 percent and registered a monthly loss of 9 percent - its worst monthly performance since August 2011.

The dollar eased against the safe-haven yen and the low-yielding euro as investors sold equities and pared bets against currencies popularly used to fund risky carry trades.

But Fischer's comments limited the dollar's losses. The dollar shed 0.4 percent to 121.19 yen >, while the euro rose 0.5 percent to $1.1236 >.

OIL JUMPS

U.S. crude oil prices have risen more than $10 a barrel in three days, erasing the month's declines.

U.S. crude jumped $3.98, or 8.8 percent, to settle at $49.20 a barrel, taking three-day gains to 27.5 percent, the most over three days since August 1990. In dollar terms, it was the biggest three-day gain since February 2011.

Brent October crude climbed 8.2 percent to settle at $54.15 a barrel.

In the U.S. bond market, 30-year Treasuries prices > fell more than a full point in late trading, pushing the yield to a one-month high of 2.964 percent.

Gold steadied, with spot gold > up 0.04 percent at $1,134 an ounce.

(Additional reporting by Robert Gibbons in New York, Noel Randewich in San Francisco, and Nigel Stephenson in London; Editing by James Dalgleish, Dan Grebler and Lisa Shumaker)