Commodity fallout hits stocks

LONDON, Nov 17 (Reuters) Oil extended losses on Friday to its lowest level in 17 months, while commodity prices slipped, dragging European shares down and pushing resource-related currencies lower against the dollar.

U.S. Treasuries extended gains after U.S. housing starts data came in weaker than expected, with investors awaiting a speech from Cleveland Federal Reserve president Sandra Pianalto for more clues on the interest rate outlook.

Oil prices have been pressured by forecasts for a mild winter in the United States, but analysts say there were also more fundamental concerns in the market.

''There is rising concern that we could be going into a U.S.

economic slowdown... This fall also speaks of a well supplied crude market and a warmer outlook in the U.S.,'' said Rick Mueller, senior oil analyst at consultancy ESAI.

Copper prices extended losses due to emerging signs of a supply overhang. Minor base metals and a range of precious metals were also broadly lower.

BP and Royal Dutch Shell fell as much as 2 percent, helping push Britain's FTSE100 down 0.5 percent, dragging it off Thursday's 5-1/2 year highs. Miners BHP Billiton and Rio Tinto fell 3 percent.

''These stocks have been volatile as commodity prices have fallen out but today represents a more concerted move downwards,'' a trader said.

Europe's FTSEurofirst 300 Index was down 0.3 percent at 1,468.91 points. Tokyo stocks slipped 0.45 percent, while the MSCI index of Asian stocks outside Japan fell slightly.

By 1340 GMT, U.S. crude was down more than 1 percent at 55.06.

U.S. housing starts slowed to a 1.486 million unit annual rate in October, well below economists' forecast. U.S. stock futures extended losses on the data.

STEADY RATES The dollar hit one-week highs of $1.2764 per euro and 118.13 yen, with its broad strength boosted by its gains against commodity-related currencies.

The U.S. currency hit a 7 month high against the Canadian dollar while it rose 0.4 percent against the New Zealand dollar Analysts say recent mixed data from the United States actually worked to reinforce expectations the world's largest economy is headed for a soft landing and the Fed will maintain the U.S. currency's yield advantage with its 5.25 percent rate.

''The Fed has been so clear in its message that they still see inflation and they have more positive views on the economy than the market. The Fed needs to change its communication if the market is to change its view into a bearish direction,'' said Johan Javeus, currency strategist at SEB Merchant Banking in Stockholm.

The benchymark 10-year U.S. Treasury notes traded higher after the housing data, while the December Bund future also rose briefly.

REUTERS SBA RAI2016