* Global stocks slide as months-long rally festers
* Oil falls toward $70 on brimming U.S. stockpiles
* Yen gains broadly as risk appetite sours
* Bonds flat; stock loss offsets pre-auction sale (Updates with U.S. markets activity, changes dateline; previous LONDON)
By Herbert Lash
NEW YORK, Aug 27 (Reuters) - Crude oil fell for a third day and global equity markets slid anew on Thursday as nagging doubts about the strength of economic recovery damped a rally that had propelled world stocks to 10-month highs this week.
The yen climbed across the board, hitting a five-week high against the U.S. dollar, as the pullback in equities raised concerns that a rally on greater risk appetite may have been overdone. [ID:nN27416000]
Euro zone government debt fell, easing off four-month peaks reached earlier in the day, thanks to stronger-than-forecast German inflation and data on U.S. growth. [ID:nLR110660]
But U.S. Treasury debt prices pared losses as the sell-off on Wall Street renewed a safety bid for bonds and offset selling to make room for a $28 billion auction of seven-year notes. [ID:nN27319556]
After a strong run-up in commodity and equity markets since stocks slumped to decade lows in March, analysts and investors were questioning whether prices had overshot demand.
"With a large supply overhang still intact across all petroleum groups, any bullish fundamental case must rely entirely upon future demand expectations," said Jim Ritterbusch of oil consultancy Ritterbusch and Associates.
U.S. crude for October
Brent crude
Copper rose as investors were encouraged by improving U.S. economic data that lifted hopes of recovery, but analysts warned prices had exceeded fundamentals. [ID:nLR630635]
The U.S. economy shrank less than expected in the second quarter, despite a record drop in inventories, and fewer workers filed new claims for jobless benefits last week, a sign the economy was starting to heal. [ID:nN27303398]
"We've been expecting to see signs of improvement in the economy consistent with the belief that we'll get growth in the third quarter for the first time in over a year," said David Resler, chief economist at Nomura Securities in New York.
"What we're waiting to see are clearer signs that the bounce in growth in the third quarter will be enough to sustain some momentum for further growth down the road," Resler said.
Equities investors, however, were unimpressed by the latest data on the U.S. economy, which showed gross domestic product shrank by 1 percent in the second quarter, unchanged from the government's initial estimate and better than the 1.5 percent contraction that economists had expected.
The Dow edged into positive territory as shares of Boeing
Co
Shortly after 1 p.m., the Dow Jones industrial average <.DJI> was up 1.59 points, or 0.02 percent, at 9,545.11. The Standard & Poor's 500 Index <.SPX> was down 3.49 points, or 0.34 percent, at 1,024.63. The Nasdaq Composite Index <.IXIC> was down 15.43 points, or 0.76 percent, at 2,009.00.
"People are starting to say this may not be the V-shaped recovery that everyone is talking about, so I might want to take a little bit off the table," said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.
European shares closed lower in a choppy session after banking stocks retreated from earlier gains and chemical makers slipped. [ID:nLR231034]
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed down 0.5 percent at 968.67 points.
The dollar
The euro was almost flat at about $1.4261
Gold rose in Europe. Spot gold
The benchmark 10-year U.S. Treasury note was down 1/32
Shares in Japan fell 1.6 percent after the Nikkei average <.N225> hit a 10-month closing high the previous day.
The MSCI index of Asia-Pacific shares excluding Japan <.MIAPJ0000PUS> dropped 0.8 percent. (Reporting by Richard Valdmanis, Gertrude Chavez-Dreyfuss, Rodrigo Campos and Richard Leong in New York; Jessica Mortimer, Jon Hopkins and Joanne Frearson in London; writing by Herbert Lash; Editing by Leslie Adler)