GLOBAL MARKETS-U.S. stocks fall;
bonds, dollar rise
NEW YORK, Jan 12 (Reuters) - U.S. stocks
closed lower on Thursday as the Dow average finished below 11,000 and the
Nasdaq snapped a seven-day winning streak on concerns about Iran's nuclear
intentions.
Gold slipped as the dollar rose after a smaller-than-expected
U.S. trade gap in November eased some concerns about the flow of capital
abroad in the near term.
Late profit-taking in oil wiped out gains made earlier in the
trading day amid the mounting tensions over Iran and a pipeline explosion in
Nigeria.
U.S. Treasury bond prices climbed after a successful auction of
inflation-indexed debt.
U.S. Secretary of State Condoleezza Rice joined European powers
in saying that Iran must be referred to the U.N. Security Council over its
nuclear plans.
Iran has said it aims only to develop a civilian nuclear power
program, but the international community suspects it is seeking to develop an
atomic bomb.
"The market is overbought short-term. We've had a huge move
since the first of the year ... people are looking for an excuse to sell. That
came in the form of Secretary Rice raising significant concerns about Iran's
nuclear program," said Michael James, senior trader with regional
investment bank Wedbush Morgan in Los Angeles.
The Dow Jones industrial average ended down 81.08 points, or 0.73
percent, at 10,962.36. The Standard & Poor's 500 Index was down 8.12
points, or 0.63 percent, at 1,286.06. The technology-laced Nasdaq Composite
Index was down 14.67 points, or 0.63 percent, at 2,316.69.
Doubts about corporate earnings and downgrades of blue-chip
companies, JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) and
Coca-Cola Co. (KO.N: Quote, Profile, Research) .
JPMorgan slid about 1.8 percent to $39.95 on the New York Stock
Exchange after Piper Jaffray lowered its rating on JPMorgan, saying healthy
capital markets and synergies from the bank's merger with Bank One are now
fully figured into JPMorgan's stock price. On Wednesday JPMorgan stock hit its
highest level in more than 1-1/2 years.
Coca-Cola shares fell nearly 0.6 percent to $41.44 on the NYSE
after Goldman Sachs cut its rating on the company, the world's largest soft
drink maker, on expectations of lower European demand.
Profit warnings from RadioShack Corp. (RSH.N: Quote, Profile,
Research) , the No. 3 U.S. electronics chain, and American Home Mortgage
Investment Corp. (AHM.N: Quote, Profile, Research) , a U.S. real estate
investment trust, stirred concern about the outlook for corporate earnings.
Shares of RadioShack Corp. (RSH.N: Quote, Profile, Research) fell
1.4 percent, or 31 cents, to end at $21.49 on the NYSE. American Home Mortgage
Investment shares fell 10.7 percent, or $3.60, to $30, also on the NYSE.
"What little earnings reports we have had have been a little
bit more disappointing than outperforming," Jim Paulsen, chief investment
officer at Wells Capital Management, said.
Japan's Nikkei rose 81.60 points to 16,445.19, the highest close
since Sept. 20, 2000.
In Europe, the pan-European FTSEurofirst 300 index closed up 0.3 percent at
1,311.92 points after earlier touching a fresh 4-1/2 year high at 1,312.99
points.
GOLD SLIPS AS DOLLAR RISES
February delivery gold (GCG6: Quote, Profile, Research) slipped 80 cents to
$549.30 an ounce on the New York Mercantile Exchange's COMEX division after
the dollar strengthened in response to the U.S. trade data.
"The data was a surprise. People had been expecting way worse, and that's
why the dollar looks a bit stronger. That brought with it some liquidation in
the gold," said a trader at a precious metals refiner in New York.
The U.S. government said the trade gap shrank to $64.2 billion in November
from October's $68.1 billion,
By late afternoon, the euro was down around 0.7 percent from late Wednesday to
$1.2036. Against the yen, the dollar traded at 114.27 yen, up 0.13 percent.
U.S. TREASURY BOND PRICES
The benchmark 10-year notes (US10YT=RR: Quote, Profile, Research) rose 11/32
in price. The yield fell to 4.41 percent from 4.46 percent on Wednesday.
Two-year notes (US2YT=RR: Quote, Profile, Research) rose 3/32 in price for a
yield of 4.39 percent, down from 4.43 percent on Wednesday.
"The TIPS auction was better than anticipated, especially the indirect
bid," Frank Hsu, director of global fixed-income at Fimat, said of the
sale of Treasury Inflation Protected Securities. "Technical buying and a
weak stock market also helped."
Because indirect bidders include overseas central banks, the auction results
assuaged concerns about a possible waning of foreign demand for U.S.
government debt.
Bond investors were heartened by a larger-than-expected surplus in the
government budget for the month of December, but barely reacted to data
showing the U.S. trade deficit narrowed slightly in November.
OIL SETTLES FLAT
February crude (CLG6: Quote, Profile, Research) settled unchanged at $63.94 a
barrel after rising earlier to $65.05, the highest since Oct. 4 on the
concerns about Iran and an explosion on a crude oil pipeline in Nigeria.
Germany, France and Britain said Iran should be brought before the U.N.
Security Council for possible sanctions after the country resumed nuclear fuel
research.
Traders are worried sanctions might crimp oil supply from Iran, the world's
fourth-largest oil exporter.
The explosion on a crude oil pipeline in Nigeria forced Royal Dutch Shell to
cut 100,000 barrels per day of production. (Reporting by Caroline Valetkevitch,
John Parry, Zach Howard, Gene Ramos and Sophie Hares in London and Eriko Amaha
in Tokyo)
