* U.S. government bonds lower on supply concerns
* Crude gains as gasoline stocks fall more than expected
* U.S. stocks fall as Obama economic plans remain fuzzy
* Safe-haven bids drive up dollar, send bonds lower (Recasts with U.S. markets, changes dateline; previous LONDON)
By Herbert Lash
NEW YORK, Feb 25 (Reuters) - Oil prices jumped 6 percent on Wednesday after a sharp drop in gasoline inventories but global stocks fell on more dour data and investors' uncertainty over how U.S. President Barack Obama plans to fix the U.S. economy.
The U.S. dollar extended gains against the euro and U.S. gold futures rose as investors remained averse to risk amid fresh signs of a deepening downturn across the world.
Plunging exports drove Japan's trade deficit to a record high and caused a sharp contraction in Germany, while in the United States sales of previously owned homes plunged in January and prices fell to a six-year low. For details, see [ID:nN25479552].
Investors again fled to safety, helping lift the price of euro zone government bonds, but U.S. Treasury debt prices were weaker as the huge supply of bonds to fund the U.S. government's economic stimulus efforts weighed on markets.
"The negative housing data -- the lack of any bottom in the plummeting housing market -- along with sharply lower stocks this morning have rekindled the demand for safe-haven dollar assets," said Omer Esiner, senior market analyst at Ruesch International in Washington.
U.S. stocks fell as investors found little new in a major speech late Tuesday by Obama, who broadly outlined his agenda for tackling the worst U.S. financial crisis in decades.
Shares of financial services companies and industrials led
U.S. shares lower, with Boeing
"(Obama) gave a very good speech in terms of making the citizens feel better about some of the things going on, but there is still a lot of work to be done," said Tim Smalls, head of U.S. stock trading at brokerage Execution LLC in Greenwich, Connecticut.
After 1 p.m., the Dow Jones industrial average <.DJI> was down 132.14 points, or 1.80 percent, at 7,218.80. The Standard & Poor's 500 Index <.SPX> shed 14.26 points, or 1.84 percent, at 758.88. The Nasdaq Composite Index <.IXIC> slipped 26.16 points, or 1.81 percent, at 1,415.67.
European shares ended lower for a fourth straight session as defensive sectors such as telecom and pharmaceuticals stocks fell, outpacing a broadly positive day for banks, which gained on a British asset bailout plan.
The FTSEurofirst 300 <.FTEU3> index of top European shares provisionally closed 0.5 percent lower at 716.15 points.
Oil rose to over $42 a barrel after the U.S. Energy Information Administration said gasoline supplies declined by 3.4 million barrels, or more than the expected drop of 100,000 barrels in the week to Feb. 20. [EIA/S]
"Demand is coming back," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York.
U.S. light sweet crude oil
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 1.09 percent at 87.729. Against
the yen, the dollar
The euro
The dollar has benefitted in recent months from the view that the U.S. economy will be the first to recover given the government's proactive measures to revive the growth. That makes the U.S. dollar the best place to park investor cash amid the ongoing global uncertainty.
U.S. gold futures turned higher following two down sessions as deepening losses in the stock market bolstered bullion's appeal as a safe haven. [ID:nN25374427]
Spot gold prices
Asian shares rallied overnight on after comments by Federal Reserve Chairman Ben Bernanke sparked a rebound in battered financial shares.
Japan's Nikkei average <.N225> jumped 2.7 percent, while the MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> rose 1.1 percent. (Reporting by Ellis Mnyandu, Nick Olivari, Ellen Freilich in New York and Alex Lawler, Atul Prakash and Naomi Tajitsu in London; writing by Herbert Lash, Editing by Chizu Nomiyama)