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GLOBAL MARKETS-Stocks mixed after jobs data, dollar gains ground

Published 10/22/2009, 01:34 PM
Updated 10/22/2009, 01:36 PM
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* US share prices mixed, Dow hovers around 10,000 mark

* Greenback rises from 14-month lows vs euro

* Ericsson results disappoint, tars European stocks

* Gold, oil dip on U.S. dollar safe-haven buying (Updates with U.S. markets, changes byline, dateline; previous LONDON)

By Daniel Bases

NEW YORK, Oct 22 (Reuters) - U.S. share prices were mixed on Thursday after worse-than-expected U.S. jobless claims data overwhelmed upbeat corporate results, causing reflex safe-haven buying of the greenback which lifted it from 14-month lows.

Disappointing results from telecoms maker Ericsson soured the mood in European stock markets while also contributing to declines in the United States.

The overall impact was a diminishing of some of the recent optimism about a global economic recovery.

"People are starting to say 'Is this real and can this continue?" said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.

"Particularly with the government, with the unemployment numbers, people are getting nervous about that."

China's economic growth increased in the last quarter but fell short of some of the more optimistic expectations. Stocks in Shanghai closed lower. For more see [ID:nSP452724].

The rise in the U.S. dollar against the euro put some selling pressure on the commodities markets as the gain in the currency's value made purchases more costly.

Yields on U.S. Treasuries rose as investors sold on persistent concerns about massive amounts of pending government debt issuance. Euro zone government debt prices rose late in the session as investors switched to safer German Bunds after ratings agency Fitch downgraded Greece's sovereign debt.

Shortly after 1 p.m. (1700 GMT), the Dow Jones industrial average <.DJI> was up 80.48 points, or 0.81 percent, at 10,029.84. The Standard & Poor's 500 Index <.SPX> was up 2.84 points, or 0.26 percent, at 1,084.24. The Nasdaq Composite Index <.IXIC> was down 1.94 points, or 0.09 percent, at 2,148.79.

Solid earnings from Dow components 3M , a diversified technology company, Travelers Cos Inc , the largest U.S. publicly traded property-casualty insurer, and fast food giant McDonald's Corp helped lift the index.

In Europe, Ericsson posted lower-than-expected third-quarter core earnings and said sales in its key mobile networks market were hampered by tough market conditions.

But a bigger-than-expected rise in the number of U.S workers filing new claims for unemployment benefits last week indicated the jobs market remains fragile, undermining the optimism generated by the corporate results. [ID:nN22541121]

One index of U.S. leading economic indicators rose to its highest since October 2007, however, marking a string of gains for the past six months through September. [ID:nN22198158]

DOLLAR RISE

Unsettled investors looked to the U.S. dollar for a measure of safety, helping it recover ground versus the euro and yen.

The greenback has traded in inverse correlation to equities in recent months, based on shifting investor risk appetite.

The euro fell back below $1.50 to trade down 0.09 percent at $1.4994 from a previous session close of $1.5008. The dollar hit a one-month peak against the yen of 91.70 before drifting back to 91.40, up 0.45 percent, from a previous session close of 90.990.

Since April, the dollar has lost nearly 12 percent against six other major currencies <.DXY>, with heavy selling in recent weeks pushing it to multimonth lows.

But the gains for the dollar put downward pressure on oil and gold. Crude oil prices fell 88 cents, or 1.08 percent, to $80.49 per barrel, down from Wednesday's one-year high, while spot gold fell $2.10, or 0.20 percent, to $1,056.80 an ounce.

Another trigger for the dollar's gains, analysts said, were fears that China may start considering withdrawing some of its emergency stimulus programs after data showed the economy grew by a robust 8.9 percent in the third quarter.

But the government said it would retain its ultra-loose monetary and fiscal policies, and Chinese-based analysts added growth was not strong enough to trigger policy tightening.

"There are fears that when there is a removal of stimulus the underlying fundamentals won't be enough to drive global growth," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto. "But the truth is there is a lot of growth coming out of China and that whole region."

World stocks as measured by MSCI <.MIWD00000PUS> were down 0.52 percent with the emerging market component off around 0.73 percent <.MSCIEF>.

Europe's FTSEurofirst 300 <.FTEU3> lost 1.09 percent. Japan's Nikkei <.N225> closed down 0.64 percent. (Additional reporting by Jeremy Gaunt, Blaise Robinson, Naomi Tajitsu and George Matlock in London, Chris Reese, Steven C. Johnson, Ryan Vlastelica in New York, and Lucia Mutikani in Washington; Editing by James Dalgleish)

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