DJI- NEW YORK, May 18 (Reuters) - World stocks erased the year's gains o n F riday as investors fled risky investments for safe-haven assets on concerns about the euro zone's deepening debt woes, while U.S. stocks lost ground after the debut of Facebook's failed to ignite optimism.
Brent crude closed at its lowest in 2012 as the euro zone crisis raised fears of a global slowdown that could dent oil demand, while German borrowing costs hit record lows.
World stocks, as measured by the MSCI index <.MIWD00000PUS>, dropped 1.1 percent and gave up all of their gains for the year to date fueled by the European Central Bank's injection of more than 1 trillion euros. It was a sixth day of losses for the index, which is now down 0.4 percent for the year.
Riskier assets were all heading for big weekly losses.
Investors were unnerved by a ratings downgrade of 16 Spanish banks by Moody's Investors Service, which deepened worries about the euro zone contagion. But market speculation that regulators could reinstate a ban on short selling of financial stocks sparked a rally in banking shares, with Spain's Banco Santander up 3 percent. U.S.-listed shares of Banco Santander rose 3.6 percent to end at $5.76.
Spain's banks, saddled with bad loans after a property boom collapsed, may need a bailout that would strain Madrid's already stretched finances and possibly require an international bailout regardless of any contagion threat from Greece. [ID:nL5E8GHH59]
"Sentiments are still pretty negative," said Francis Rodilosso, portfolio manager with Market Vectors in New York. "People are definitely seeing the glass half-empty."
Ongoing political and financial turmoil in Greece has kept investors worried about its ability to remain in the euro zone.
A G8 meeting of leaders of major industrial economies this weekend is expected to tackle the crisis in Europe and look for ways to promote growth.
On Wall Street, U.S. stocks fell after a sloppy debut by Facebook spoiled hopes that a spectacular open for the most-anticipated stock sale in years would brighten investors' mood. The benchmark S&P 500 posted a weekly loss of 4.3 percent.
Facebook's debut was hit with glitches, including a delay in initial trading. The stock closed at $38.23, barely above its $38 offering price.
For the day, the Dow Jones industrial average <.DJI> ended down 73.11 points, or 0.59 percent, at 12,369.38. The Standard & Poor's 500 Index <.SPX> was down 9.64 points, or 0.74 percent, at 1,295.22. The Nasdaq Composite Index <.IXIC> was down 34.90 points, or 1.24 percent, at 2,778.79.
The FTSEurofirst 300 <.FTEU3> of leading European shares slid 1.1 percent, falling for a fifth day.
In the foreign exchange market, the euro rose from a four-month low against the dollar. It tumbled to $1.2640, not far from its trough of 2012, before recovering to trade slightly higher.
Europe's woes kept pressure on oil prices.
Safe-haven gold prices rose more than 1 percent, with spot gold at $1,588.96 an ounce.
NYMEX- NEW YORK, May 18 (Reuters) - U.S. crude oil futures fell more than 1 percent on Friday, down for the sixth straight session, as worsening problems in Greece and Spain raised worries of contagion in the euro zone.
Oil futures fell on the drumbeat from global stock markets, which erased the year's gains as investors pared holdings for safe-haven assets such as gold, on growing concerns about the euro zone debt crisis.
Oil investors were cautious ahead of the G8 summit this weekend where U.S. President Barack Obama was reported by Japanese news agency Kyodo to be seeking support for tapping the release of emergency oil reserves ahead of the European Union's July embargo of Iranian crude. [ID:nL1E8GGEWR].
Obama will host the G8 meeting at Camp David in Maryland.
Reversal of the Seaway pipeline was completed earlier this week and its first crude oil headed for Houston from Cushing, Oklahoma, is expected to flow by the weekend, according to owners Enterprise Products and Enbridge Inc .
Anticipation of the landmark move, which was expected to help ease the glut in Midwest crude stockpiles, had reduced Brent's spread against U.S. crude in recent days, but on Friday, the spread widened, amid caution from analysts that impact of the reversal could be slow to hit the U.S. oil markets. [ID:nL1E8GH9YX]
* On the New York Mercantile Exchange, crude for June delivery , which expires on Tuesday, settled at $91.48 a barrel, falling $1.08, or 1.17 percent. For the week, it slid $4.65, or 4.84 percent, down for the a third in a row.
* In three weeks, front-month U.S. crude has slumped $13.45, or 12.82 percent, the biggest three-week loss since the week to Aug. 14, 2011, when prices dropped 14.54 percent.
* Hedge funds and big speculators cut their bullish bets on U.S. crude oil and options by 12,789 contracts, to 140,936, in the week to May 15, hitting the lowest level since late 2010, according to a weekly report from the U.S. Commodity Futures Trading Commission. [ID:nL1E8GIH8C]
* The number of oil drilling rigs in the United States rose 10 to 1,382 last week, the highest level in 25 years, according to a weekly report from oil services firm Baker Hughes. [ID:nL1E8GI6DU]
* U.S. petroleum consumption fell 0.3 percent in April from a year ago, to 18.549 million barrels per day and gasoline usage climbed for the third month in a row, the American Petroleum Institute said. [ID:nL1E8GI4RO]
* Iraq's oil exports from is southern ports have slipped by 170,000 bpd so far this month, according to shipping data tracked by Reuters, although Iraq hopes remain it will sustain shipments at April's record rate. [ID:nL5E8GID60]
CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade fell 2 percent, halting a three-day advance, as investors took profits by liquidating long positions and unwinding intra-market and inter-market spreads, traders said.
* Funds hold a near record-large net long position in CBOT soybeans, leaving the market vulnerable to long liquidation.
* Despite Friday's sell-off, front-month soybeans settled 1 cent higher for the week, halting a two-week slide.
* Traders exited long soybean/short wheat spreads on worries about dry weather hurting wheat yield prospects in the U.S. Plains, Russia and China.
* Soybeans also pressured by news this week that China, the world's top soy importer, will sell 600,000 tonnes of domestic soy from state reserves next week, potentially slowing its purchases on the world market.
* Favorable weather for most of the U.S. Midwest adds pressure. Rains are likely in the northwestern U.S. Midwest this weekend, boosting soil moisture for recently planted crops in Iowa and Minnesota, said John Dee with Global Weather Monitoring.
* As of 1:44 p.m. CDT (1844 GMT), ICE U.S. July soybeans were down 31-1/4 cents at $14.06-3/4 a bushel on volume of 409 contracts.
* CBOT July soybeans fell below support at the 50-day moving average of $14.17-3/4.
* CME Group said it would start nearly around-the-clock trading in CBOT grains and oilseeds on Sunday night after U.S. regulators approved its plan to expand electronic trade to 21 hours per session, from 17 hours. [ID:nL1E8GI7NG]
FCPO- SINGAPORE, May 18 (Reuters) - Malaysian palm oil futures ended almost flat on Friday after hitting a near 5-month low, as lingering worries over Greece's potential exit from the euro zone dampened investors' risk appetite.
Palm oil posted a 5.5 percent weekly loss, the worst since November last year, reflecting the volatility that also dragged down the broader commodities market.
"The sell down has not happened only to palm oil, it also happened to gold, crude oil and the equities market. Sentiment is very bad," said Alan Lim, research analyst with Malaysia's Kenanga Investment Bank.
"Volatility can still be expected in the market as the Greek election is still one month away. Fundamentally palm oil is still good, for instance dry weather in the U.S. could indicate a tighter oilseed supply."
Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange gained one ringgit to close at 3,096 ringgit ($976) per tonne, after going as low as 3,034 ringgit, a level last seen on Dec. 21 last year.
Traded volumes stood at 45,218 lots of 25 tonnes each, almost double the usual 25,000 lots.
Traded volumes have been unusually high this week on increased hedging activities, hitting an all-time high of 63,019 lots on Wednesday, surpassing the previous record of 48,741 lots on Nov. 17 last year.
On the demand side, there was no clear direction for Malaysian palm oil exports for the first half of the month as cargo surveyors reported opposite trends.
Traders will be looking out for the next exports data due on Monday, hoping for a better indication of demand trend.
On the technicals front, palm oil will fall to 3,019 ringgit per tonne, with a potential downside at 2,971 ringgit, said Reuters market analyst Wang Tao. [ID:nL4E8GI2NQ]
REGIONAL EQUITY- BANGKOK, May 18 (Reuters) - Southeast Asian stock markets extended their losses on Friday, with Philippine shares sliding almost 3 percent, as escalating problems in Europe made investors head for the exits.
The Philippine index <.PSI> a suffered 5.4 percent loss for the week, its worst weekly loss since September and the second-worst performer in the region, following Vietnam, which posted a weekly loss of 9.4 percent, its worst in a year.
Malaysia <.KLSE> had its worst weekly loss in eight months, falling 3.3 percent on the week, while Singapore <.FTSTI> posted a 3.6 percent fall on the week, its worst in nine months.
Sentiment in the region was expected to remain weak but low valuations, particularly for Malaysian companies, could offer investors a longer-term buying opportunity, said Bharat Joshi, a fund manager for Aberdeen Asset Management in Kuala Lumpur.
"It's still very uncertain and I think markets will remain very volatile," he said.
"But on the ground, companies are still reporting a good set of results, especially Malaysia. So this is an interesting time for stock picking," he said.
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