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GLOBAL MARKETS-Financial, energy shares down, gold at record

Published 12/02/2009, 01:58 PM
Updated 12/02/2009, 02:03 PM
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* U.S. shares turn mixed, hurt by financials and energy

* Gold edges to another record high of $1,216.75

* U.S. dollar gains on yen after BOJ unveils stimulus plan

By Daniel Bases

NEW YORK, Dec 2 (Reuters) - U.S. stocks fell on Wednesday, dragged down by financial and energy shares, while gold rose to a new high even as the U.S. dollar strengthened.

Wall Street fell after stocks briefly touched 14-month highs on better-than-expected U.S. employment data.

Financials were hurt by concerns U.S. derivatives legislation now being considered would cut short buying momentum.

Weaker oil prices stoked a sell-off in energy-related stocks.

European share prices managed closed higher on news U.S. private employers shed 169,000 jobs in November versus 195,000 in October. This marked the eighth straight monthly decline in private-sector job losses, according to ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC. [ID:nN02192113]

Stocks in Japan closed at two-week highs on short-covering after the yen fell against the greenback. A plan by the Bank of Japan to boost economic support ended up stalling a rally in the yen to the benefit of the U.S. dollar. [ID:nT182340]

There are "concerns about the risk of further quantitative measures from the Bank of Japan or even intervention, which were exacerbated by the (PM) comments overnight and by the Bank of Japan's policy announcement yesterday," said Daniel Katzive, currency strategist at Credit Suisse in New York.

"That's made the market a little bit nervous," he said.

Nervousness over credit problems for Dubai, which proved a drag on global markets starting late last week have since dissipated as investors sort through just how much of a debt overhang there is from the city-state.

State-controlled Dubai World [DBWLD.UL], which led the emirate's transformation into a regional hub for finance, investment and tourism, unveiled details late on Monday of the restructuring and which parts of its empire were affected. The process will focus on $26 billion of debt owed by its main property firms, Nakheel and Limitless. [ID:nGEE5B000Z]

In stocks, benchmark indexes were mixed. The Dow Jones industrial average <.DJI> was down 38.62 points, or 0.37 percent, at 10,432.96. The Standard & Poor's 500 Index <.SPX> was down 2.23 points, or 0.20 percent, at 1,106.63. The Nasdaq Composite Index <.IXIC> was up 4.55 points, or 0.21 percent, at 2,180.36.

JPMorgan Chase & Co , fell 1.6 percent to $41.56. The bank said it could see its revenue fall by as much as $3 billion in a "worst case" scenario under the legislation, according to a note from Sanford C. Bernstein to investors.

"The banks don't know what the heightened financial reform is going to be. There is no clarity to regulation," said Weston Boone, vice president of listed trading at Stifel Nicolaus Capital Markets in Baltimore.

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.5 percent higher at 1,015.77 points. Japan's benchmark Nikkei <.N225> inched up 36.74 points to 9,608.94 to close at its highest level since Nov. 18.

The MSCI All-Country World Index <.MIWD00000PUS> rose 0.11 percent to 299.89.

GREENBACKS AND GOLD

In a breakdown of the current inverse relationship of a stronger U.S. dollar and weaker price for gold, both financial instruments gained ground on Wednesday.

The dollar rose versus a basket of major trading-partner currencies, with the U.S. Dollar Index <.DXY> up 0.34 percent at 74.618.

Against the Japanese yen, the dollar was up 0.67 percent at 87.22. Last week the yen traded at its strongest point in roughly 14-1/2 years.

"We had very strong yen appreciation (recently), and now there's some retracement. Risk appetite is a little bit stronger than it was last week when we had the Dubai news, so investors are taking profits," said Marcus Hettinger, FX strategist at Credit Suisse in Zurich.

The euro was down 0.31 percent at $1.504.

Investors' attention has turned to the European Central Bank's policy meeting on Thursday. It is widely expected to keep its refi rate on hold at one percent, but also to give guidance on the timing and extent of how it intends to withdraw generous liquidity stimulus from the system.

Spot gold prices rose $14.25, or 1.19 percent, to $1211.50, having touched a record $1,216.75.

Crude oil prices fell after a U.S. government report showed domestic inventories rose far more than expected last week. The price for a barrel of U.S. light sweet crude oil fell $1.70, or 2.17 percent, to $76.67.

U.S. benchmark 10-year Treasuries rose 4/32 of a point in price, pushing the yield to 3.27 percent. European government bond yields slipped. The 10-year Bund yield eased 1.2 basis points to 3.153 percent (Additional reporting by Ryan Vlastelica, Wanfeng Zhou, Nick Olivari in New York; Atul Prakash, Jon Hopkins, Emelia Sithole-Matarise and Jamie McGeever, in London; Blaise Robinson in Paris; Elain Lies in Tokyo; Editing by Andrew Hay) ((daniel.bases@thomsonreuters.com; +1 646 223 6131; Reuters Messaging: daniel.bases.reuters.com@reuters.net))

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