* China again guides yuan lower, spooking investors
* China stocks circuit breaker suspended
* Brent hits 11 1/2-year low, bounces sharply
(Updates with U.S. market, changes comment, dateline from
previous LONDON)
By Rodrigo Campos
NEW YORK, Jan 7 (Reuters) - Shares on major exchanges fell
for a sixth consecutive day on Thursday while crude prices
bounced back from multi-year lows as volatile markets digested
another move lower in the yuan and Chinese efforts to stabilize
a sinking stock market.
Stocks on Wall Street pared losses after China suspended the
circuit breaker that stops trading for the day when stocks fall
7 percent, a halt that occurred twice this week. Analysts and
investors said the mechanism, put in place to avoid market
volatility, may have backfired.
Brent crude cut a loss of more than 6 percent to trade down
0.4 percent, with traders citing short-covering. U.S. crude
CLc1 , down as much as 5.5 percent earlier, was down 0.8
percent.
The 7-percent drop in Chinese markets overnight had
triggered a flight to safety, but the circuit breaker reversal
helped cut losses in other risk assets, including the U.S.
dollar.
Investors, however, remain concerned that China is
struggling to keep control of the yuan. The People's Bank of
China (PBOC) set the yuan midpoint rate CNY=SAEC at 6.5646 per
dollar, a 0.5 percent decline that was the biggest between daily
fixings since August. It was the eighth consecutive day the PBOC
had set a lower guidance rate.
This graphic shows how currencies, stocks, commodities,
bonds and some economic indicators have reacted to the yuan
decline since August: http://reut.rs/1VMvXYf
JITTERY STOCKS
On Wall Street, energy stocks .SPNY pared a 2-percent loss
and major indexes were down about 1 percent, about half as much
as at their session lows. Still, the S&P 500 was down almost 4
percent so far this week.
"There is a wall of worry under full construction, brought
on by China, fall in oil prices and uncertainty regarding
quarterly earnings," said Terry Sandven, chief equity strategist
at U.S. Bank Wealth Management in Minneapolis.
The Dow Jones industrial average .DJI fell 211.2 points,
or 1.25 percent, to 16,695.31, the S&P 500 .SPX lost 25.97
points, or 1.3 percent, to 1,964.29 and the Nasdaq Composite
.IXIC dropped 79.34 points, or 1.64 percent, to 4,756.42.
The pan-European FTSEurofirst 300 index .FTEU3 and the
euro zone's blue-chip Euro STOXX 50 .STOXX50E index were down
2.4 percent and 1.8 percent respectively, having fallen more
than 3 percent earlier in the session.
A gauge of major stock markets globally .MIWD00000PUS fell
1.4 percent.
STRONG EURO
Investors fear China's economy is even weaker than had been
imagined, with Beijing, in a bid to help exporters, allowing the
yuan's depreciation to accelerate.
The U.S. dollar trimmed losses against a basket of
currencies .DXY after the Chinese stock exchanges announced
the removal of the circuit breaker. The dollar index was however
down 0.4 percent on the day.
The euro EUR= gained 0.7 percent to $1.0849. The yen rose
0.4 percent to 118 per dollar JPY= after hitting 117.30, its
strongest since late August.
The benchmark U.S. Treasury yield US10YT=RR edged up after
touching its lowest since late October. U.S. 10-year Treasury
notes were last down 4/32 in price to yield 2.1914 percent from
2.177 percent late Wednesday.
Global oil benchmark Brent gained 0.5 percent at $34.40 a
barrel and WTI gained less than 0.1 percent to $33.99 a barrel.