US stocks feel weight of low holiday sales and Dubai crisis

Stocks on Wall Street made a groggy start to the week as US investors worried about slower holiday sales and world markets absorbed mixed signals over the Dubai debt crisis.

Sharemarkets in the United Arab Emirates plummeted by up to 9%, Asian markets were stronger while those in Europe dipped down after making earlier gains.

On Wall Street, the Dow Jones Industrial Average swung between gains and losses throughout the day but closing with a rally in bank stocks that pushed the gauge up 34.92 points, or 0.3%, to 10,344.84.

Consumer-discretionary stocks led the measure's decliners as investors were worried retail sales this holiday season would disappoint. Home Depot was off 1.8% and McDonald's fell 1%.

More US consumers went shopping over the Thanksgiving holiday weekend, yet spent less than last year, the National Retail Federation said.

Offsetting this, the Institute for Supply Management-Chicago said its business barometer increased to 56.1, the highest level since August 2008. Readings above 50 signal expansion.

Bank of America and J.P. Morgan Chase, both up 0.9%, led the bank stocks rally as investors realised US banks had little exposure to the Dubai debt crisis.

The S&P 500 index rose 0.4% to 1095.63, led by the consumer discretionary sector, while the technology-heavy Nasdaq Compositefinished 0.3% up at 2144.60.

Canadian stocks rose then slumped near the close, despite the economy posting its first quarterly gain in a year.

Royal Bank of Canada gained 1.2% as banks advanced. Canadian Natural Resources added 0.9% as oil increased. Kinross Gold rose 2.9% as the US dollar fell against its Canadian counterpart.

The S&P/TSX Composite Index closed 17.21 points, or 0.1%, lower at 11,447.20.

European stocks gave up short-lived gains to close lower. Utilities were among the worst performers, with RWE and GDF Suez down 1.1% and 1.6% respectively.

Auto stocks bucked the trend, however, with Volkswagen up 2% after Goldman Sachs initiated the stock with a "buy" rating.

The pan-European Stoxx 600 Index was 0.6% lower at 241.07. The UK FTSE 100 Index was down 0.4% at 5226.91, Germany’s DAX 0.4% lower at 5664.48 and the French CAC-40 Index down 0.5% to 3700.92.

Commodities: Oil steady, gold down

Crude oil fluctuated after a report showed that US business activity gained for a second month and stocks dropped on speculation that holiday sales will disappoint investors.

Crude oil for January delivery declined 5USc to $US76 a barrel in New York. Prices climbed as high as $US76.93 and dropped as low as $US75.13.

Gold fell, narrowing this month’s gains, as investor selling brought a record rally to a stop.

Gold futures for February delivery dropped $US1.70, or 0.1%, to $US1173.80 an ounce in New York, down from the all-time high of $US1196.80 on November 27. Prices are up 13% this month, heading for the biggest monthly gain in a year.

In London, gold for immediate delivery fell $US4.60, or 0.4%, to $US1173.03 an ounce.

Currencies: Dollar up, yen up

The US dollar fell against most of its major counterparts as investors shifted to riskier assets on optimism creditors to Dubai World can absorb losses on the state-controlled holding company’s debt.

The greenback was headed for its longest stretch of monthly declines versus the euro since December 2004.

The dollar traded at $US1.4981 per euro, compared with $US1.4988 at the end of last week. It was down 1.4% in November in its fifth straight monthly drop, the longest losing streak in almost five years.

The yen declined 0.3% to ¥129.30 per euro, from ¥129.67. The yen gained 0.3% to ¥86.30 per dollar, from ¥86.53. It touched ¥84.83 last Friday, the strongest level in 14 years.

The Canadian dollar strengthened for the first time in three days, rising against 13 of its 16 most-traded counterparts tracked by Bloomberg.

It appreciated 0.5% to $C1.0570 per US dollar, from $C1.0618. It was poised for a monthly gain of 2.7%. One Canadian dollar buys 94.61USc.