World sharemarkets initially surged on the pledge from China to make its exchange rate more flexible by removing the yuan's de facto peg to the US dollar.But the gains disappeared after French bank BNP Parisbas was downgraded by Fitch Ratings, reigni
World sharemarkets initially surged on the pledge from China to make its exchange rate more flexible by removing the yuan's de facto peg to the US dollar.
But the gains disappeared after French bank BNP Parisbas was downgraded by Fitch Ratings, reigniting fears of the European debt crisis.
The US dollar strengthened against the euro after earlier falling against growth-oriented currencies such as New Zealand's and Canada's.
Gold prices retreated after rising to record highs, as the China currency move was viewed as having longer-term implications rather than immediate ones.
On Wall Street, the Dow Jones Industrial Average finished 8.23 points, or 0.1%, down at 10,442.41 after being up nearly 144 points in the morning session.
The Dow's strongest components had a heavier reliance on global growth: Alcoa surged 5.5%, while General Electric climbed 2.2% and Caterpillar rose 1.8%.
Meanwhile, Home Depot, Microsoft, Wal-Mart Stores and Merck all fell 1%.
The Nasdaq Composite was down 0.9%, closing at 2289.09, while the S&P 500 index fell 0.4% to finish at 1113.20. The materials sector remained in positive territory, while consumer-discretionary, technology and utilities stocks all lagged.
Other markets: Europe, Asia up
European stocks rose, led higher by basic resources. Among stocks in the sector, Vedanta Resources gained 6%, while ArcelorMittal added 5.7%.
The European Stoxx index for basic resources rose 4.2%. BP bucked the trend by falling 2.2% in London after the company said that costs related to the Gulf of Mexico oil spill had reached $US2 billion.
The pan-European Stoxx 600 index closed up 1% at 258.18. The UK's FTSE 100 index rose 0.9% to 5299.11, France's CAC-40 index ended up 1.3% at 3736.15 and Germany's DAX added 1.2% to 6292.97.
Asian stock markets and currencies powered higher but some gains were erased when China set the dollar-yuan central parity rate at the same level as Friday.
Japan's Nikkei Stock Average was up 1.5%, Australia's S&P/ASX 200 was 1.5% higher, Korea's Kospi Composite rose 1.5% and New Zealand's NZX-50 added 0.6%.
Commodities: Oil, gold up
Crude-oil futures fell back after initially rising following China's currency announcement.
Light, sweet crude for July delivery settled 66USc, or 0.8%, higher at $US77.82 a barrel in New York, retreating from its morning high of $US78.92. North Sea Brent crude on London's ICE futures exchange traded up 60USc at $US78.82 a barrel.
Gold futures also pulled back after initially rising with the most actively traded contract for August delivery settling down $US17.60 at $US1240.70 an ounce in New York.
Currencies: Dollar up, euro down
The US dollar tumbled against the Chinese yuan but turned higher against the euro and yen, as investors pondered the implications of China's decision to loosen its de facto peg against the greenback.
The dollar also recovered from losses against the Canadian and New Zealand dollars, though stayed up against the Australian currency, which are all seen as most sensitive to global economic growth expectations.
The US dollar bought 6.8056 yuan in New York trading, about 0.4% lower than its Friday level of 6.8275 yuan.
The euro bought $US1.2321, compared with $US1.2365 on Friday. Last week, the euro rose against the dollar by the most since September as traders reassessed the need for the relative safe-haven status of US unit.
Against the Japanese yen, the dollar rose to ¥91.01, from ¥90.76 late on Friday.
