* Equities slip on profit-taking before Alcoa
* Oil dips below $70 on dollar strength, fuel build
* Bonds rise as reach for yield trumps supply worry
* Dollar gains, rebounds from 8-1/2-month low vs yen
(Updates with U.S. markets activity, changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Oct 7 (Reuters) - Gold set record highs for a
second straight day on Wednesday, while the dollar rebounded
against major currencies as optimism stoked by Australia's
interest-rate hike the prior session dissipated.
An element of risk aversion returned to markets, as the
dollar rose and government debt edged higher on both sides of
the Atlantic.
Oil prices dipped below $70 a barrel as a strengthening
dollar prompted less investment in crude and after U.S. data
showed fuel stocks surged last week in the world's biggest
energy consumer. For details, see: []
Copper prices also slipped in thin and volatile trade
during Chinese holidays, with rising inventories fueling
uncertainty over demand against a still fragile economic
backdrop. []
European shares closed lower and U.S. equities fell as
investors booked profits ahead of the start of the U.S.
earnings season after the bell on Wednesday, when Alcoa <AA.N>
reports third-quarter results. []
"We are just seeing a little bit of profit taking. There is
no bad economic data out there," said David Buik, partner at
BGC Partners. "We have Alcoa's results tonight and then the
earnings show will be on the road.
At 1 p.m. (1300 GMT), the Dow Jones industrial average
<> was down 21.32 points, or 0.22 percent, at 9,709.93. The
Standard & Poor's 500 Index <.SPX> was up 0.29 points, or 0.03
percent, at 1,055.01. The Nasdaq Composite Index <> was up
3.10 points, or 0.15 percent, at 2,106.67.
The pan-European FTSEurofirst 300 <> index of top
shares closed down 0.4 percent at 988.76 points.
The dollar rebounded from a more than an 8-month low
against the yen after Japanese Finance Minister Hirohisa Fujii
said he was watching the currency market and that the exchange
rate was driven by dollar weakness rather than yen strength.
The dollar came under heavy pressure on Tuesday after a
rate increase in Australia bolstered expectations the global
economy was recovering and fueled a worldwide stock rally.
Investors held their selling of the dollar after recently
pushing it sharply lower.
"We're now seeing a bit of a pullback in the move and the
dollar is recovering a little bit," said Samarjit Shankar,
managing director of global FX strategy at BNY Mellon in
Boston.
The market "is coming back to the realization that was just
one central bank, and it's not necessarily so that other
central banks would follow right away," he said.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.24 percent at 76.519.
The euro <EUR=> was down 0.31 percent at $1.4672 and against
the yen, the dollar <JPY=> was up 0.06 percent at 88.81.
Spot gold <XAU=> hit a historic $1,048.20 an ounce, before
easing. U.S. December gold futures <GCZ9> hit a new peak of
$1,049.70 an ounce.
Gains were later trimmed as the dollar halted its slide
versus a basket of currencies,
The weekly report from the U.S. Energy Information
Administration (EIA), the statistical arm of the Department of
Energy, showed crude stocks falling by 1 million barrels,
against market expectations for a 2.2 million drop.
"Crude is pivoting around $70 a barrel with factors on
either side to hold it there. The key is going to be when
demand figures for gasoline and distillate pick up," said
Tradition Energy's Gene McGillian.
U.S. light sweet crude oil <CLc1> fell $1.14 to $69.74 a
barrel.
Earlier in Asia, shares rose for a second day on growing
confidence in a strengthening global recovery boosted resource
and financial companies.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> was up 1.4 percent; the Thomson Reuters index
of regional shares <.TRXFLDAXPU> edged up 1 percent.
Japan's Nikkei average <> gained 1.2 percent.
(Reporting by Ryan Vlastelica, Wanfeng Zhou, Joshua Schneyer
and Burton Frierson in New York; Joanne Frearson and Emelia
Sithole-Matarise in London; writing by Herbert Lash; Editing by
Theodore d'Afflisio)
