Dow retreats as blue chips disappoint

Stocks on Wall Street rebounded late in the session to finish near even after a mixed session highlighted by disappointing blue-chip earnings.

At the close (10am NZ time), the Dow Jones Industrial Average was down just 3.33 points, or less than 0.1%, to 11,977.19,after being down as much as 80 points earlier in the session. The broader market indexes closed just above their previous levels.

On Monday, the Dow rose 108 points to be within striking distance of the 12,000 level, which it last exceeded on June 19, 2008.

Leading the Dow's declines, American Express dropped 2.2%, 3M dropped 1.8% after its fourth-quarter profit fell 0.7% as margins declined, Bank of America dropped 2.1% after the US Securities and Exchange Commission charged subsidiary Merrill Lynch with securities fraud, and healthcare giant Johnson & Johnson shed 1.8% after reporting a 12% decline in fourth-quarter earnings.

It also issued a forecast for 2011 that fell short of Wall Street expectations.

The Nasdaq Composite rose 0.1% to 2719.25 and the S&P 500 index was less than a point higher at 1291.18.

Other markets: Europe down, Asia mixed
European stocks dropped after a surprise decline in the UK economy. It reported gross domestic product fell 0.5% in the fourth quarter, the first quarterly contraction in GDP since the third-quarter of 2009.

The Stoxx Europe 600 index fell 0.7% to 280.10 The UK's FTSE 100 index closed down 0.4% to 5917.71, with banks and retailers among the weakest performers.

The German DAX 30 index edged down 0.1% to 7059.01, while the French CAC 40 index fell 0.3% to 4019.62.

Asian markets struggled for direction, with Australian stocks lifted by news of lower-than-expected inflation, while Chinese and Hong Kong shares dropped on lingering concerns Beijing could soon raise interest rates.

Indonesian and Philippine stocks rebounded after a string of recent declines, while Indian shares turned volatile as banks declined after the central bank raised interest rates.

Several regional markets got a lift in the wake of a solid advance on Wall Street overnight, which helped Japan's Nikkei Stock Average climb 1.1% to 10,464.42 on the back of exporters.

Australia's S&P/ASX 200 gained 0.5% to 4807.82, Korea's Kospi added 0.2% 2086.67 and Taiwan's Taiex edged up 0.5% to 8991.39.

Chinese stocks fell on weak commodity prices and on worries about further tightening measures.

The Shanghai Composite dropped 0.7% to 2677.43, while Hong Kong's Hang Seng index slipped 0.1% to 23,788.83.

India's Sensex was down 0.9% to 18,969.45 and Singapore's Straits Times was down 0.1% to 3181.15.

Commodities: Oil, gold down
Crude-oil futures fell to the lowest level in seven weeks, stung by a surprise contraction in the UK economy that shook confidence in the global economic recovery.

Light, sweet crude for March delivery traded $US1.04, or 1.2%, lower at $US86.83 a barrel in New York. Brent crude on the ICE futures exchange traded $US1.54 lower at $US95.07 a barrel.

Gold futures fell to a three-month low as the dollar rose and the metal's status as a refuge continued to dim.

The most actively traded contract, for February delivery, was down $USUS1325.70 an ounce in New York. The intraday low of $US1321.90 was the lowest price since October 27.

Currencies: Pound down, euro up
The euro rose to an 11-week high against the pound after a surprising drop in UK economic output.

The stunning drop of 0.5% for the quarter put any talk of an interest-rate hike on hold, making the pound less attractive than other currencies that could raise rates sooner.

The euro rose as high as 86.49p, while the pound plunged to $US1.5752, from $US1.69001 late on Monday. The euro was at 86.445p and the pound was at $US1.5810.

The euro recently traded at $US1.3669, up from $US1.3645. The dollar was at ¥82.42, compared with ¥82.49, while the euro was at ¥112.60 compared with ¥112.55.