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US STOCKS-Materials sector leads Wall St drop on euro-debt woes

Published 11/26/2010, 02:01 PM
Updated 11/26/2010, 02:04 PM
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* Retailers hopeful about holiday shopping season

* Commodity-related shares lead declines, U.S. dollar up

* Dow off 0.85 pct; S&P down 0.75 pct; Nasdaq off 0.34 pct (Updates to close)

By Rodrigo Campos

NEW YORK, Nov 26 (Reuters) - Commodity-related shares led U.S. stocks lower on Friday in a shortened post-holiday session, as investors unloaded risky assets on worries that euro-zone debt problems may continue to spread.

The U.S. dollar rallied while the euro slid to a new two-month low amid fears that Portugal and Spain could follow Ireland in needing bailouts to shore up their economies.

The S&P materials index dropped 1.2 percent as key base metals prices fell, pressured by the advancing greenback and after the Shanghai Futures Exchange raised margin requirements, prompting liquidation of speculative positions.

Freeport McMoRan Copper & Gold dropped 2.6 percent to $98.07.

"There's concerns from euro land and sharp sell-offs in large European banks kind of set the tone for the day," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.

The S&P financial index fell 1.1 percent, with Bank of America down 1.2 percent at $11.14.

The Dow Jones industrial average dropped 95.28 points, or 0.85 percent, to end at 11,092. The Standard & Poor's 500 slipped 8.95 points, or 0.75 percent, to 1,189.40. The Nasdaq Composite lost 8.56 points, or 0.34 percent, to 2,534.56.

For the week, the Dow dropped 1 percent and the S&P 500 fell 0.86 percent, but the Nasdaq Composite gained 0.65 percent.

Investors were further rattled Friday after China warned against military acts near its coastline ahead of U.S.-South Korean naval exercises. Earlier, North Korea had said those naval drills risked pushing the region toward war. The North shelled a South Korean island earlier this week.

Consumer-related stocks were in focus as Black Friday, the traditional sales day that follows Thanksgiving, kicked off what could be the strongest holiday shopping season in three years.

"The (consumer) data that has been leaking seems to be better than expected, and after two years of miserable performance at the malls, there seems to be some pent-up demand," Weeden & Co's Goldman said.

Still, retail shares were sluggish. Discount retailers Wal-Mart Stores Inc fell 0.5 percent to $53.74 and Target Corp shed 0.6 percent to $56.88.

But Macy's Inc, operator of its namesake retail chain and upscale Bloomingdale's, edged up 0.4 percent to $26.

Del Monte Foods Co rose 4.5 percent to $18.80 a day after the company agreed to a buyout led by Kohlberg Kravis Roberts & Co.

The shortened session saw 2.8 billion shares exchange hands on the New York Stock Exchange, the American Stock Exchange and Nasdaq, sharply below the year-to-date average of 8.64 billion.

The U.S. stock market closed at 1800 GMT following the Thanksgiving holiday on Thursday.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of slightly more than 2 to 1, while on the Nasdaq, about seven stocks fell for every four that rose. (Reporting by Rodrigo Campos; Editing by Jan Paschal)

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