-- WRAPUP-U.S. blue chips fall, bonds rise on war fears --
NEW YORK, Dec 12 (Reuters) - Fears of war in Iraq and a
report that Baghdad may have helped an al Qaeda-linked group
get nerve gas pushed blue-chip stocks lower and spurred
safe-haven flows of cash into U.S. Treasury bonds on Thursday.
The dollar hit a five-month low against the euro as
investors worried about the twin threats of war and terrorism.
Spot gold's price vaulted to a three-year high on the
flight-to-safety buying.
Oil prices jumped to seven-week highs as OPEC ministers
agreed to cut excess supplies and a strike in Venezuela choked
shipments from the world's fifth-largest oil exporter.
A gain in new claims for U.S. jobless benefits last week
partially offset a report showing slightly stronger November
retail sales.
"The (stock) market can't make headway when you're facing
no resolution in Iraq, when we don't know what shape the fiscal
policy will take, and when the profit picture is not very
clear," said Stanley Nabi, managing director at Credit Suisse
Asset Management, which manages about $55 billion in North
America.
The Dow Jones industrial average <.DJI> lost 50.74 points,
or 0.59 percent, to close at 8,538.40, based on the latest
available figures. The broader Standard & Poor's 500 Index
<.SPX was off 3.38 points, or 0.37 percent, at 901.58, while
the technology-laced Nasdaq Composite Index <.IXIC> added 2.96
points, or 0.21 percent, to 1,399.55.
Despite the gains in technology stocks, traders and fund
managers said they were holding back from taking large
positions until the new year brings fresh evidence of a profit
recovery.
WORRIES HIT DOLLAR, BOOST BONDS
The dollar fell 1 percent against the euro and
three-quarters of a percent against the Swiss franc after The
Washington Post reported that the Bush administration had a
credible report that extremists linked to al Qaeda received a
chemical weapon in Iraq in November or October.
"The dollar got its head handed to it before New York
opened with that Washington Post story about an al Qaeda link,
partly because there never had been any firm linkage between al
Qaeda and Iraq before," said Alan Ruskin, research director at
4Cast in New York.
Iraq, currently undergoing weapons inspections by the
United Nations, called the report "ridiculous."
In New York late-afternoon trading, the euro was at $1.0181
<EUR=>, up 1 percent on the day and a five-month high.
The Swiss franc, which typically benefits during times of
global political stress, also gained on the dollar, which
traded at $1.4504 francs <CHF=>, down 0.73 percent and its
lowest in more than three weeks.
Even Japan's beleaguered yen gained ground against the
dollar on Thursday, overcoming whispers in the market about a
weaker number expected Friday when the closely watched "tankan"
business sentiment survey is released. The dollar fell 0.74
percent to 122.70 yen <JPY=> from 123.61 yen late Wednesday.
Investors also sought out safe-haven U.S. Treasuries,
though gains were limited. Traders said much of the bullish
bets, particularly in short-term notes and futures, came from
hedge funds. They said overall activity was lackluster before
the holidays.
Prices of two-year Treasury notes <US2YT=RR> rose 2/32 to
100-11/32, yielding 1.83 percent, the lowest level in a month,
compared with 1.86 percent at Wednesday's close. Benchmark 10-
year notes <US10YT=RR> gained 4/32 to 99-29/32, yielding 4.01
percent, the lowest level in three weeks.
The risk aversion spread to the gold market, where spot
gold jumped to $331.45 an ounce -- a price not seen since
October 1999.
In New York, COMEX gold for February delivery shot up
$6.60 to settle at $332.10 an ounce -- not far below the active
contract's 2002 high at $333.70 set on June 4.
CRUDE OIL UP ON OPEC, VENEZUELA
U.S. January crude oil futures on the New York Mercantile
Exchange gained 61 cents, or 2.2 percent, to settle at $28.01 a
barrel after earlier reaching $28.22 a barrel, the highest
since late October.
Brent crude on London's International Petroleum Exchange
climbed 62 cents to $26.85 a barrel.
Ministers of the Organization of Petroleum Exporting
Countries meeting in Vienna said they reached a decision on
raising formal output levels while cutting actual production by
improving quota discipline.
Chronic quota-busting has resulted in real OPEC output of
up to 3 million barrels a day above its formal supply target of
21.7 million bpd. Many in the market were skeptical the cartel
would succeed in enforcing quota discipline.
In overseas stock markets, London's benchmark FTSE 100
index <.FTSE> slipped 39.6 points, or 1 percent, to close at
3,935.3. Tokyo's Nikkei <.N225> declined 18.97 points or 0.22
percent to end at 8,708.69 -- finishing its seventh down day.
((Wall Street Desk, 646-223-6112))
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MARKETS/US
Symbols:
US;SPX GB;FTSE JP;NIKI US;SPL US;COMP US&DJI HK;HSI SG;STII
12-Dec-2002 23:58:21 GMT |
