Weekend markets: US stocks, dollar fall

Stocks on Wall Street fell as investors exercised caution ahead of the potential shutdown of the federal government and the start of US companies' first-quarter reports.

The federal government's fiscal 2011 budget has a deadline of midnight (4pm NZT). A continued impasse would set the stage for the government's first shut down in 15 years.

[UPDATE: Just an hour before a midnight deadline, Congressional leaders reached agreement. Republican House Speaker John Boehner announced that he had a deal with the Democratic Senate Majority Leader Harry Reid and President Barack Obama.

[Congress quickly passed a short-term funding measure to keep the government running for a few days while details of the broader agreement were settled, with a vote on the final package coming by midweek.]

Commodities rallied because of a weaker US dollar, with crude oil topping $US112 a barrel. Gold and silver surged.

Among global developments, the European Central Bank’s raising of its benchmark interest rate 0.25 percentage point made the euro an even more attractive option against the greenback.

Stocks in Europe and Asia rose as metal prices surged and another earthquake in Japan caused little damage.

The Dow Jones Industrial Average declined 29.44 points, or 0.24%, to close at 12,380.05 (8am NZT). Alcoa fell1.1% ahead of next week’s start of the first quarter corporate filings season.

The Nasdaq Composite Index shed 0.6%, to 2780.41 and the S&P 500 index slipped 0.4% to 1328.17.

Both broader measures fell 0.3% for the week while the Dow eked out a slim gain of less than 0.1%.

Other markets: Europe, Asia up
The Stoxx Europe 600 index closed up 0.3% at 281.68, its 11th gain in the last 13 sessions. It had eased 0.3% on Thursday.

The UK's FTSE 100 benchmark closed up 0.8% at 6055.75, the CAC 40 index advanced 0.8% to 4061.91 in France while in Germany the the DAX 30 gained 0.5% to 7217.02, led by a 2.9% gain in exchange operator Deutsche Börse.

In Asia, Japanese stocks jumped on relief that Thursday’s powerful earthquake hadn't inflicted much damage.

Nikkei Stock Average erased earlier losses to finish 1.8% higher at 9768.08 – a weekly gain of 0.6%, its third consecutive weekly gain.

Australia's S&P/ASX 200 rose 0.7% to 4940.57, its highest close in nearly a year, China's Shanghai Composite added 0.7% to 3030.02, its highest close since November 11, and Hong Kong's Hang Seng Index climbed 0.5% to 24396.07, its sixth gain in seven sessions and just 0.1% off its 2011 closing high.

In India, the Sensex lost 139.73 points, or 0.7%, to close at 19451.40, its fourth consecutive loss.

Commodities: Oil tops $US112 a barrel, gold hits record
Oil prices rose for the sixth time in seven sessions, spurred by signs of stalemate in Libya and concerns that violence in other oil-producing nations could further curtail global supplies.

Investors are also turning toward commodities as a hedge against inflation despite signs that cheap-money policies are nearing an end.

Light, sweet crude for May delivery settled $US2.49, or 2.3%, higher at $US112.79 a barrel in New York, the highest in two and a half years.

Brent crude on the ICE futures exchange rose $US3.98 to $US126.65 a barrel, the highest close since July 2008, and just $US17 lower than the all-time settlement high.

Gold futures continued their march toward $US1500 and silver topped $US40 for the first time since 1980.

The gold contract for April delivery added $US14.90, or 1%, to settle at a record $US1473.40 an ounce in New York. The most actively traded contract, for June delivery, also settled at a record, rising $US14.80, or 1%, to $US1474.10.

The April silver contract rose $US1.058, or 2.7%, to settle at $US40.60 an ounce, its highest close since January 21, 1980.

Currencies: US dollar under pressure
The US dollar fell as traders continued to shed the low-yielding greenback for higher-yielding euro and Australian dollar.

The greenback’s lone bright spot came against the battered yen, which continues its descent since the G-7 intervention three weeks ago.

The euro rose to $US1.4443 from $US1.4304 late on Thursday. The Australian dollar again hit a post-1983 float high, climbing as high as $US1.0546. It was at $US1.0541 from $US1.0457.

The dollar was at ¥84.97 from ¥84.93 and the euro was at ¥122.73 from ¥121.62. The pound rose to $US1.6347 from $US1.6321.