Wall Street stocks head lower

Stocks on Wall Street headed lower on weak US economic data and fears the arrest of the IMF chief would create delays in resolving euro-zone debt issues.

Latest figures underscored both the uneven state of the economic recovery and the weakness of the housing market. A New York-area manufacturing survey came in well below expectations for May, while the National Association of Home Builders' housing market index stayed at low levels.

Meanwhile, International Monetary Fund managing director Dominique Strauss-Kahn is being held in a New York jail after failing to win bail on sexual-assault charges.

His case could weaken the IMF's ability to resolve the euro-zone debt crisis. The IMF has just agreed to a bailout package for Portugal but one for Greece has yet to be negotiated. That is being handled by Strauss-Kahn’s deputy, John Lipsky, who has taken over the organisation’s top job on a fill-in basis.

At the close (8am NZ time), the Dow Jones Industrial Average was down 47.38 points, or 0.4%, to 12,548.37, while the S&P 500 index fell 0.6% to 1329.47. The technology-oriented Nasdaq Composite tumbled 1.6%, to 2782.31.

Other markets: Europe recovers, Asia falls
European stocks recovered from early losses as a two-day meeting of European finance ministers got under way in Brussels.

The market rebounded as market participants came around to the idea that Strauss-Kahn's arrest was unlikely to derail a bailout for Portugal as well as making progress on a package for Greece.

A late-session rally in the resources sector also lent support.

The Stoxx Europe 600 index closed down 0.1% at 280.13. France's CAC-40 index ended down 0.7% at 3989.82 and Germany's DAX fell 0.2% to 7387.54.

The UK's FTSE 100 index erased earlier losses to end marginally lower at 5923.69, thanks to gains in the mining sector.

Most Asian stocks fell as concerns mounted over Euro-zone debt and global economic growth, with resource producers hurt as prices of several commodities declined.

Japan's Nikkei Stock Average fell 0.9% to 9558.30, Hong Kong's Hang Seng index shed 1.4% to 22,960.63 and China's Shanghai Composite declined 0.8% to 2849.07,

Australia's S&P/ASX 200 dropped 1.3% to 4650.0, Korea's Kospi lost 0.8% to 2104.18, Taiwan's main index gave up 1.1% to 8911.71 and India's Sensex dropped 1% to 18,345.03.

Commodities: Oil falls, gold steady
A drop in US gasoline futures below $US3 a gallon pulled crude oil futures down as well Light, sweet crude for June delivery was down $US1.96, or 2%, to $US97.69 a barrel in New York. Brent crude on the ICE futures exchange fell 94USc, or 0.8%, to $US112.89 a barrel.

Gold futures held steady as traders looked to currency markets for direction. The gold contract for May delivery was down $US3.70, or 0.3%, at $US1,489.70 an ounce in New York.

Currencies: Euro recovers
The euro recovered some of last week's losses as soft US economic numbers and euro-zone inflation data put interest-rate differentials back into market focus.

It rose to fresh session highs above $US1.42, reaching $US1.4234 from $US1.4107 late Friday. The euro also advanced against the yen, climbing to ¥114.98 from ¥114.04 late on Friday.

But the euro fell about 0.4% to 1.2555 Swiss francs, while the US dollar slipped about 1% to 0.8832 franc.

Meanwhile, the dollar was at ¥80.78 compared to ¥80.81. The pound was at $USUS1.6193 late on Friday.