Global stocks fall amid renewed economic jitters

By Herbert Lash

NEW YORK (Reuters) - Global stocks fell on Tuesday as slumping housing markets on either side of the Atlantic and worries at the Federal Reserve in March that a severe downturn is possible rekindled recession fears.

Minutes of the March 18 meeting of Fed policy-makers and a twice-yearly assessment of global financial markets by the International Monetary Fund hit investors already sullied by disappointing earnings and a big mortgage-related loss.

Sterling fell to an 11-year low on weak British housing data and the dollar rose against a basket of currencies on concern the U.S. economic slump may spread to other countries and prompt their central banks to cut interest rates.

Oil prices eased on profit-taking, gains in the dollar and expectations that a government report on Wednesday will show an increase in U.S. crude stockpiles due to rising imports.

A prediction by the U.S. government's energy forecaster that U.S. gasoline demand is likely to shrink this summer for the first time since 1991 reflected higher prices, but also pointed to another sign of U.S. economic weakness.

The global credit crisis returned to haunt markets, a day after news of a pending capital infusion into troubled U.S. savings and loan Washington Mutual buoyed investor sentiment.

The IMF said turmoil in credit markets could spread -- with losses possibly approaching $1 trillion -- and cautioned that risks to global economic growth had increased.

The Fed minutes showed the U.S. central bank's staff projected real gross domestic product would contract in the first half and warned a downturn could be prolonged and severe.