Global stocks fall as GE results jolt markets

By Herbert Lash

NEW YORK (Reuters) - Global stocks fell sharply and government bond prices rallied on Friday after General Electric posted disappointing earnings that jolted investors and cemented a view that the U.S. economy was in a recession.

The dollar fell broadly as GE's results and profit warning, in tandem with a worse-than-expected deterioration in consumer confidence, undermined the view that a U.S. slowdown would be brief and that the worst of a credit crisis might be over.

Oil fell after the International Energy Agency cut its oil demand growth forecast for 2008, and gold drifted lower despite the dollar's decline.

GE shares slumped nearly 12 percent, their worst decline since the stock market crash of October 1987. The conglomerate, viewed as an economic bellwether because of the range of its businesses, reported an unexpected 6 percent decline in earnings and lowered its forecast for 2008.

In another sign of the bleak outlook, U.S. consumer confidence in early April fell to its lowest since 1982, diving deeper into recessionary territory on heightened worries over inflation and jobs, according to the Reuters/University of Michigan Surveys of Consumers.

Euro zone government bond futures staged their biggest one-day percentage rise in a month on renewed flight-to-safety flows and U.S. Treasury debt prices rose sharply after the GE results and weak consumer confidence survey.

"Surprises like the GE earnings decline just add to the speculation that the U.S. economy has not bottomed," said Kevin Giddis, managing director of fixed-income trading with Morgan Keegan in Memphis.

"There is a growing list of new variables which could force the Fed to stay in the easing mode a little while longer," he said.