Wall Street pauses for banking plan as European stocks rise
(11am update) Stocks on Wall Street mostly fell, ending a two-day run, but the main benchmarks remained steady as recession fears outweighed a rally in financial and industriual shares.
Traders are worried President Obama's stimulus package won’t be enough to pull the nation out of a recession.
Coca-Cola slid 2.9% after after it vetoed Lion Nathan’s $A7.3 billion takeover offer for the 30% owned Australian Coke bottler.
Hartford Financial Group and General Electric advanced more than 13% on speculation they will get government aid from the delayed second banking nailout package.
About eight stocks fell for every seven that gained on the New York Stock Exchange. The main Dow Jones index lost 9.72 points, or 0.1%, to 8270.87. The broader S&P 500 increased 0.2% to 869.89.
Benchmark indexes drifted between gains and losses for most of the day.
Overshadowing this was the delayed announcement from Treasury Secretary Timothy Geithner of a new bank-rescue plan and the continued debate by legislators of President Obama’s stimulus package.
The Senate is ready to vote on its version of a spending plan that will be at least $US780 billion. Lawmakers are more than 90% agreed on its contents.
European stocks climbed for a second day as Barclays posted results that beat analysts’ estimates. In France, a €6.5 billion government aid package for the auto industry sparked a rally in car stocks.
Barclays, the UK’s third largest bank by assets, added 11% after net income increased 49% to £2.66 billion, ahead of expectations. Royal Bank of Scotland advanced for a fifth straight day. Peugeot Citroen and Renault, France’s biggest car companies, climbed more than 3.9%.
National benchmark indexes gained in all of the 18 western European markets.
The pan-European Dow Jones Stoxx 600 finished up 0.4% at 199.35, near where it was at the start of the year. The UK’s benchmark FTSE 100 closed up 15.74 points, or 0.4%, at 4307.61,
Germany’s Dax 30 was up 22.19 points, or 0.4%, at 4666.82. The French benchmark Cac 40 was up 12.08 points, or 0.39%, at 3134.87,
Commodities: Oil up, gold down
Crude oil rose the most in two weeks on speculation the. stimulus plan will revive demand in the world’s largest energy-consuming country.
Crude oil for March delivery rose $US1.74, or 4.3%, to $US41.91 a barrel. Oil is down 6% this year and 55% from a year ago.
Gold fell for the first time in four sessions on expectations the stimulus package will be smaller than expected, easing inflation fears. Silver also declined.
Gold climbed 5% in January on demand for a store of value amid a deteriorating economy and a surge in government spending.
Investments in exchange-traded funds backed by bullion reached a record and speculators last week raised bets the price would increase.
Gold futures for April delivery have fallen $US14.30, or 1.6%, to $US900 an ounce in New York. The price climbed 2.4% in the previous three sessions.
Currencies: Yen, dollar down
The yen and the dollar declined against the euro on speculation a new US financial-recovery plan will limit losses at banks and reduce haven demand.
The yen declined to the weakest level in a month against the pound and slid versus the New Zealand dollar on reduced risk aversion.
The yen declined 0.5% to ¥119.45 per euro in New York. The dollar depreciated 0.9% to $US1.3057 per euro. The yen advanced 0.5% to ¥91.41 per dollar.
The Norwegian krone climbed against all of the 16 most- active currencies after the government said it would inject $14.8 billion in capital to revive bank lending.
In other developments:
• European finance ministers are increasingly concerned that certain governments (Spain Italy, Greece and Portugal) are finding it harder to borrow in financial markets as budget deficits mount and economies slump, according to a confidential report prepared for this week’s Group of Seven meeting.
• Latvia's economy has shrunk at the fastest rate since the early 1990s, when it split from the Soviet Union. GDP fell 10.5% in the last quarter of 2008.
• Amazon.com, the world’s largest internet retailer, introduced a faster and thinner version of the Kindle, the electronic book reader that has sold out two years in a row.
• Nissan is to cut 20,000 jobs worldwide, 8.5% of its workforce, over the next year because of a sharp fall in sales. The Japanese carmaker made the announcement as it said it expected to make a loss of ¥265 billion ($US2.9 billion).