Global stocks fall on growth concerns, but oil higher

NEW YORK (Reuters) - Stock markets around the world slumped on Wednesday after the World Bank cut its growth forecasts for 2015 and 2016, fuelling fears that the benefits of cheaper oil may be offset by anemic economies and the threat of deflation.

While oil prices rebounded after an extended decline, bond yields and copper prices fell as investors sought safety in government debt and gold. The U.S. dollar fell 0.3 percent against a basket of currencies, and dropped 1.2 percent against the yen.

The S&P 500 is on track for its fourth straight daily decline, while the CBOE Volatility index is up about 15 percent so far this year. In a cautious signal for the fourth-quarter earnings season, JPMorgan Chase & Co reported earnings that missed expectations, sending shares down 3.9 percent to $56.15.

Also adding to the day's caution was a read on December U.S. retail sales. Sales fell 0.9 percent, a much bigger decline than had been anticipated, raising concerns that the drop in gas prices was not translating to more consumer spending elsewhere.

"Lower growth was on everyone's mind, but to see the World Bank come out like this really put people on edge, as did the retail sales, which I found more surprising than anything," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York. "I would've expected a slight improvement, if anything, given the drop in gas prices."

The day's losses were widespread. The MSCI International ACWI Price Index fell 0.6 percent while shares in Japan lost 1.7 percent.

European shares fell 1 percent, though earlier fell nearly twice that amount. Nerves there were soothed somewhat after a top adviser to the European Union's highest court advised judges to approve a bond-buying plan by the European Central Bank aimed at boosting the struggling euro-zone economy.

The perceived removal of a potential legal roadblock helped push the euro below its 1999 launch rate against the dollar for the first time in more than nine years.

The Dow Jones industrial average fell 189.68 points, or 1.08 percent, to 17,424, the S&P 500 lost 17.38 points, or 0.86 percent, to 2,005.65 and the Nasdaq Composite dropped 27.03 points, or 0.58 percent, to 4,634.47.

The benchmark 10-year U.S. Treasury note traded down 17/32 in price to yield 1.8313 percent, the lowest yield since May 2013. German Bund yields fell close to a record low of 0.4 percent.

Copper prices fell 4.6 percent in their sixth straight daily decline, dropping to their lowest in more than half a decade, while silver was off 0.2 percent. Gold rose 0.6 percent.

U.S. crude futures rose 1.3 percent but remained down 3.8 percent for the week, on track for their eighth straight weekly decline. Brent crude rose 0.8 percent.

(Editing by Meredith Mazzilli)