* European shares fall 1 pct, dollar at 7-week lows vs euro
* Crude slips after data point to high U.S. inventories
* Gold heads for 16 pct quarterly gain, best in 30 years
* Government bonds end quarter strong too
By Marc Jones
LONDON, March 31 (Reuters) - World stocks fell for the first
time in four days on Thursday, the final day of a roller-coaster
first quarter that has hammered the dollar and the pound but has
proven the best in decades for gold and bonds.
European markets had a groggy morning with shares FTEU3
down 1 percent, the dollar hovering near a seven-week low versus
the euro EUR= and oil LCOc1 volatile again after an
extremely wild V-shaped ride so far this year.
Analysts were cautious about drawing too many conclusions
amid the normal end-of-quarter choppiness, but there was a sense
that the underlying currents of the past few months were still
running strong.
Oil was stuck at $39 a barrel on record U.S. stockpiles and
China was put on a downgrade warning by S&P, while euro zone
inflation data showed it remains non-existent
underscoring just why the European Central Bank is cranking up
its stimulus efforts.
This quarter "has all been about the three C's. Commodities,
China and central banks," said Aberdeen Asset Management
investment committee member Kevin Daly.
When oil hit $27 a barrel in mid-January there were "pretty
dark" predictions for the global economy, he said, but the
rebound in crude, China and ECB stimulus and the Federal Reserve
cooling rate hike expectations had all bolstered confidence.
The ECB's two rounds of additional aid this year is a large
part of the reason why German government bonds are set for their
best quarter since the height of the euro zone crisis in late
2011.
Bund yields DE10YT=TWEB were down another couple of ticks
ahead of U.S. trading. They have shed nearly 50 basis points
since the start of the year to leave them within touching
distance of zero again. U.S. treasuries have surged too.
In the currency market, the dollar remained weak as the
latest sell-off continued following this week's cautious
comments on the global outlook from the head of the Federal
Reserve, Janet Yellen.
The euro pushed up to $1.1365 EUR= and the yen hovered at
112.36 to the greenback to leave the six currency dollar index
.DXY on track for its biggest monthly fall since April 2015
and largest quarterly drop in five years. FRX/
"Obviously Tuesday was very interesting from Janet Yellen
and it had the desired effect," said Charles Schwab (NYSE:SCHW) managing
director Kully Samra.
BLIZZARD OF DATA
Sterling has also taken a pounding this year as concerns
about a potential British exit, or 'Brexit', from the European
Union, have grown.
It barely budged on Thursday but has seen its biggest
quarterly tumble in 6-1/2 years against the euro EURGBP=R and
on a trade-weighted basis, although on the flip side, March has
been its best month in almost a year against the dollar. GBP=D4
The U.S. currency's recent weakness has also been a boon to
the Australian and New Zealand dollars, which have both soared
to nine-month highs, and it has also boosted Wall Street, which
is at its highest level of the year.
It is expected to dip back in line with Europe later when it
resumes. Traders are bracing for blizzard of data too, including
jobless claims figures that will set the tone for Friday's
closely watched monthly payrolls figures. ECONG7
Overnight, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS finish at its highest since early
December as emerging markets continued to capitalise on the
commodity rebound and the dollar's decline. EMRG/FRX
This year's turbulant start left MSCI's benchmark EM equity
index .MSCIEF down 14 percent by the time it bottomed on Jan.
21 and Bond market spreads - a rough reflection of borrowing costs - up 18 percent.
But fast forward 2-1/2 months and EM stocks are up 20
percent. Currencies from the Russian rouble RUB= to the
Brazilian real BRL= have surged and struggling parts of Africa
have some of the best-performing bonds in the world.
"The snap-back (rally) has happened very quickly, but it
always happens like that," said Allianz (DE:ALVG) Global Investors
portfolio manager Shahzad Hasan.
GOLD SHINES BRIGHTEST
Asia has been carved in two though. Japan's Nikkei .N225
sagged 0.7 percent on Thursday to an 11 percent quarterly loss,
having been slammed by the 7 percent surge in the yen against
the dollar.
Shanghai shares .SSEC have been an even bigger loser,
having dropped about 15 percent since the start of the year,
notwithstanding a gradual rebound since mid-January.
At the opposite end of the spectrum, safe-haven gold XAU=
has been the big winner of 2016 so far.
It ticked up to $1,232 an ounce and has jumped a whopping 16
percent this quarter, its best run in nearly 30 years. GOL/
Certain Industrial metals have been red-hot too. Copper
CMCU3 is up 2.5 percent, while tin CMSN3 and zinc CMZN3
have soared 15 and 10 percent respectively.
"It is difficult to get bearish on gold at this stage given
that the Fed has made it quite clear that it is reluctant to
raise rates," said INTL FCStone analyst Edward Meir.
"As a result, the dollar is not rallying on constructive
macro releases, and we have to suspect that its weaker tone will
limit any substantial declines in gold for the time being."
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Cross assets global http://reut.rs/1Rx8jLT
Emerging market assets YTD http://reut.rs/1ZKAaO6
Commodities performance http://link.reuters.com/rac73w
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