* Oil agency's action on reserves adds to economic concern
* Private sector activity, rising jobless claims spur rout
By Herbert Lash
NEW YORK, June 23 (Reuters) - Oil prices plunged, global stocks tumbled and the euro shed more than 1 percent on Thursday after dismal economic news, including an unexpected announcement that strategic oil reserves will be tapped, sent a chill through markets.
European shares declined further and and government debt prices on both sides of the Atlantic extended gains after U.S. initial claims for state unemployment benefits climbed more than expected last week. For details see [ID:nN1E75M08L]
Gold fell by almost 2.0 percent and was set for its biggest daily fall in over a month. The euro hit an all-time low against the Swiss franc as anxiety about Greece and a slowing U.S. economy damped investors' risk appetite and encouraged a bid for safety.
The rise in initial jobless claims indicated little improvement in the U.S. labor market, while slower private sector activity this month in China and Europe underscored a global slowdown. [ID:nLDE75M0UB]
The International Energy Agency said it will release 60 million barrels of oil from strategic government stockpiles in a bid to push down crude prices and underpin the global economy. [ID:nLDE75M1BR]. The announcement exacerbated fears about growth.
"Oil is selling off on the news of the reserve release, but the main problem here is the economic slowdown," said James Dailey, portfolio manager of TEAM Asset Strategy Funds in Harrisburg.
"The stock market has come to a realization that the slowdown is worse than expected, that we are not just in a soft patch but a long-term slowdown."
Brent crude futures for August LCOc1 fell $6.46 to $107.77 a barrel. U.S. crude CLc1 fell $4.48 to $90.93.
World stocks as measured by MSCI's all-country world stock index .MIWD00000PUS were down 2.0 percent, pushing the index into negative territory for the year.
The Dow Jones industrial average .DJI was down 208.20 points, or 1.72 percent, at 11,901.47. The Standard & Poor's 500 Index .SPX was down 20.85 points, or 1.62 percent, at 1,266.29. The Nasdaq Composite Index .IXIC was down 32.19 points, or 1.21 percent, at 2,637.00.
Comments by Greek opposition leader Antonis Samaras, who said the only way for Greece to repay its debt was for the government to change its current fiscal policies, added to investors' skittishness to take on risk. [ID:nB4E7GA00G].
Some analysts said the comments suggested Greece's parliament could reject austerity measures that are scheduled for a vote next week.
Capping the bleak outlook was the downward revision on Wednesday by the Federal Reserve to its U.S. economic growth forecasts. Remarks by Fed Chairman Ben Bernanke, who said some headwinds facing the economy could be a lingering drag, added to the gloom.
"Bernanke's cautious outlook and the persistent headwinds to the U.S. economy ... that might linger until year-end, including concerns about Greece, have affected market sentiment," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.
The euro fell 1.4 percent to $1.4127 EUR=, its lowest level in nearly a week, and it also hit a fresh record low at 1.1847 EURCHF=EBS, falling 1.6 percent.
U.S. Treasuries briefly trimmed an advance after the IEA announcement. The benchmark 10-year U.S. Treasury note US10YT=RR was up 19/32 in price to yield 2.92 percent.
German bunds already had gained after signs of a slowing euro zone growth raised fears over the ability of Greece and other countries to battle their debt crises. [ID:nL6E7HN1XZ]
Bund futures FGBLc1 rallied to a session high of 127.18, up 103 ticks on the day.
Spot gold XAU= fell about 2 percent to a session low of $1,514.60 an ounce. Prices later ticked up a bit to $1,518.95. (Additional reporting by Ellen Freilich, Robert Gibbons in New York; Christopher Johnson, Jonathan Cable, Kirsten Donovan, Brian Gorman and Sue Thomas in London; Writing by Herbert Lash; Editing by Kenneth Barry)
0.82
0.03