* World shares slide on U.S. results, France credit downgrade
* Oil falls as ample crude stocks outweigh Mideast tensions
* Dollar extends gain against yen after U.S. housing data
By Herbert Lash
NEW YORK, Nov 20 (Reuters) - World shares fell on Tuesday on weak U.S. corporate results and after France lost its top credit rating from Moody's, while oil fell as ample crude supplies outweighed worries about fighting between Israel and Palestinians.
U.S. stocks fell after the benchmark S&P 500 index had gained more than 2 percent since Friday, its best two-day run in nearly four months, on optimism a deal could be reached to stave off the looming U.S. "fiscal cliff."
But doubt over a speedy resolution of automatic tax hikes and spending cuts totaling about $600 billion that threaten to cause a recession is keeping investors on edge.
"The market is going to go up and down based on rhetoric coming out of Washington," said Steven Roge, portfolio manager at RW Roge & Co in Beverly, Massachusetts.
"Because the delta of outcomes is so gigantic - you could have us go off the fiscal cliff, Europe blow up or fiscal cliff gets passed, growth resumes, Europe grows its way out of the debt crisis - we are just waiting for direction and the fiscal cliff is that first piece of information."
Hewlett-Packard Co tumbled 1 1.6 percent to $11. 75 and was the biggest drag on t h e Dow and S&P 500 a fter the company took an $8.8 billion charge related to its acquisition of software firm Autonomy, citing "serious accounting improprieties." The computer and printer maker swung to a fourth-quarter loss.
The Dow Jones industrial average was down 54.72 points, or 0.43 percent, at 12,741.24. The Standard & Poor's 500 Index was down 4.18 points, or 0.30 percent, at 1,382.71. The Nasdaq Composite Index was down 7.80 points, or 0.27 percent, at 2,908.27.
European shares were about break-even after slipping earlier on Moody's announcement of a cut in France's credit rating.
While France's downgrade had been expected and was largely priced-in, analysts said the previous session's big gains - when the FTSEurofirst 300 posted its biggest daily rise in 10 weeks - meant some were using it as a reason to take profits.
The index rose 0.2 percent to 1,093.17, while MSCI's all-country world equity index was unchanged at 323.77.
The dollar extended gains versus the yen after U.S. housing starts data suggested the housing market recovery was gathering steam, even though permits for future construction fell.
The dollar last traded at 81.64 yen, up 0.12 percent on the day. The euro rose as high as $1.2828 and at last trade was flat at $1.2802, according to Reuters data.
U.S. housing starts rose to their highest rate in more than four years in October.
Crude prices fell to $111 a barrel as concern over Europe's economy also pressured oil and other commodities after ratings agency Moody's stripped France of its AAA credit rating due to an uncertain fiscal and economic outlook.
Brent crude was down 24 cents to $111.46 per barrel and U.S. crude fell 78 cents to $88.50.