US housing drop sends Wall Street into reverse

An unexpected drop in US home construction and building permits dragged Wall Street stocks down from 13-month highs.

The technology sector also fell on disappointing earnings guidance from Autodesk, the design software company.

Home construction fell sharply in October, erasing months of gains as uncertainty over renewal of a tax credit for home buyers increased builders' caution. Housing starts decreased 10.6% to a seasonally adjusted 529,000 annual rate.

The Dow Jones Industrial Average closed 29.33 points, or 0.3%, down at 10,408.09.

Technology components Hewlett-Packard, Intel and Cisco were among the leading decliners. H-P tumbled 1.5%, while Intel fell 1.2% and Cisco dropped 0.9%.

In the consumer sector, Walt Disney dropped 1.4%. The Dow's declines were held in check by Bank of America, which climbed 2.7%.

The financial sector was the only category of the S&P 500 to buck the trend, which saw the index finish 0.2% down at 1107.81.

The technology-heavy Nasdaq Composite shed 0.7% to 2188.09 after Autodesk fell 10% on a weaker-than-expected full-year profit outlook and 72% fiscal third-quarter profit decline.

Canadian stocks rallied then slumped as a jump in commodity prices was offset by the poor US housing report.

Silvercorp Metals and Silver Standard Resources added at least 2.8% as the price of silver rose. Metro, Canada’s second-largest food retailer by market value, added 3.9% after reporting earnings that beat analysts’ estimates.

The S&P/TSX Composite Index fell less than 2 points to 11,628.12.

European stock markets dived for a second straight day despite metals and oil continuing to roar higher, with gold notching another record and copper hitting its highest level this year.

Cadbury rose 1.2% to 797.5p as potential rival bidders emerged to challenge the Kraft Foods’ takeover offer.

Marks & Spencer climbed 5.9% after the firm named rival supermarket chain William Morrison's chief executive Marc Bolland as its new CEO. This sparked hopes for a change in strategic direction. Morrison's shares lost 4.9%.

The pan-European Stoxx 600 Index finished 0.3% lower at 249.65.

The UK's FTSE 100 Index lost 0.1% to 5342.13 and France's CAC-40 Index eased 0.02% to 3828.16. Germany's DAX finished up 0.2% at 5787.61.

Commodities: Oil down, gold up

Crude futures briefly pierced $US80 a barrel, after the release of US inventory data that showed a sharp draw in gasoline stocks and a decline in crude stocks.

But trading in the December contract later settled 9USc lower at $US79.06  a barrel in New York, having hit an intraday peak of $US80.33, the highest level since November 10.

Brent crude on the ICE futures exchange traded 78USc, or 1%, higher at $US79.75 a barrel.

Gold futures have extended record highs above $US1150 an ounce.

December gold was up $US9.40 at $US1148.20 an ounce after reaching a high of $US1151.

Currencies: Euro up, dollar lower

The euro held on to its overnight gains on the dollar as revived demand for riskier assets fuelled a rally in oil, gold, copper and other commodities.

The euro's advance lost steam when US stocks reversed direction and went into red after the disappointing US housing data.

The euro was at $US1.4943 from $US1.4869 on Tuesday. The dollar was at ¥89.19 from ¥89.30, while the euro was at ¥133.26 from ¥132.84.

The UK pound was at $US1.6807 from $US1.6813.