Stocks falter on global slowdown

By Herbert Lash

NEW YORK (Reuters) - Global equities fell amid signs of a spreading impact from rising oil prices and the credit crunch on Friday, although the dollar gained on signs the U.S. economy may be recovering faster than others.

Crude rose after Israel warned that Iran was on the verge of a breakthrough in its nuclear program, prompting concerns of a supply disruption from the OPEC nation if a confrontation were to break out.

Investors sifted through a raft of economic data from the United States and around the world, and what it meant for the currency, debt and equity markets.

A government report showing U.S. employers cut jobs for the seventh straight month in July weighed on stocks. The report also showed the jobless rate jumped to a four-year high.

While the loss of 51,000 jobs in July was not as woeful as many on Wall Street had feared, the underlying data showed patterns consistent with previous recessions.

Oil companies, utilities and computer hardware companies like Exxon Mobil, AT&T and Microsoft led the broad market lower, but the beaten-down U.S. financial sector rallied, led by a 10 percent gain in Wachovia WB.N.

The Dow Jones industrial average .DJI fell 51.70 points, or 0.45 percent, at 11,326.32. The Standard & Poor's 500 Index.SPX fell 7.07 points, or 0.56 percent, at 1,260.31. The Nasdaq Composite Index .IXIC shed 14.59 points, or 0.63 percent, at 2,310.96.

The dollar rose against the euro on the view Europe's economies may face greater headwinds in the near future than the already slumping U.S. economy.