* Goldman Sachs, Citi earnings dampen stock rally
* Wall St loses its grip on Dow 10,000; MSCI also down
* Dollar catches flight-to-safety bid as equities lower
(Updates with U.S. markets activity, changes dateline; previous
LONDON)
By Jennifer Ablan and Jeremy Gaunt
NEW YORK, Oct 15 (Reuters) - Goldman Sachs Group <GS.N>
dampened buoyant investor sentiment on Thursday with earnings
that failed to meet high-flying expectations and reversed gains
on major stock markets and pushing the dollar higher.
Investor optimism was pumped up after the Dow Jones
Industrial Average <> hit the psychologically important
10,000 level on Wednesday. The index was down 10 points, or
0.10 percent, to trade at 10,005 in mid-day trading Thursday,
after the earnings anti-climax.
The New York-based investment bank, set the tone with its
quarterly earnings -- which nearly quadrupled and topped
expectations. However, its shares fell on disappointment that
so much of the profit came from trading gains that might not be
sustainable. For story, please see [].
"There were all sorts of rumours flying around that the
results were going to be even stronger than consensus, so the
initial reaction is that they've slightly disappointed despite
beating estimates significantly," said Rupert Armitage of Shore
Capital Stock Brokers in London.
Citigroup Inc. <C.N> also reported better-than-expected
results, but it was a loss. For more on its results, please see
[].
World stocks as measured by MSCI <.MIWD00000PUS> were down
0.13 points to 297.30 but remained close to 13-month highs.
Japan's Nikkei closed up 1.8 percent and the FTSEurofirst
300 was up a smidgen, 0.1 percent, to 1017.26.
Overall, world equities remain in a sweet spot.
Bank of America Merrill Lynch said on Wednesday their
monthly survey of fund managers had shown increasing
bullishness but it had not reached the level yet that risked a
sharp counter swing.
"Fears of a double-dip have receded, while worries about
inflation and monetary tightening are not imminent enough to
prevent an October surge in risk appetite," Michael Hartnett,
the bank's chief global equity strategist, said in a note to
clients.
The number of U.S. workers filing new claims for jobless
insurance unexpectedly fell last week to the lowest level since
January, according to a government report on Thursday that
hinted at stabilization in the labor market.
Story: [] Table: []
"Another decline in jobless claims strongly suggest that
the worst for employment conditions have now passed," said Tom
Sowanick, co-president and chief investment officer at Omnivest
Group LLC.
DOLLAR ENJOYS FLIGHT TO QUALITY
Not coincidentally, the dollar caught a slight bid on
optimism the U.S. economy is recovering and the U.S. central
bank may raise interest rates sooner than previously thought.
The greenback was up against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
at 75.553 from a previous session close of 75.551.
Higher U.S. interest rates would make U.S. assets more
attractive to investors and increase demand for dollars to buy
them.
The euro <EUR=> was down 0.07 percent at $1.4913 from a
previous session close of $1.4924. Against the Japanese yen,
the dollar <JPY=> was up 1.36 percent at 90.64 from a previous
session close of 89.420.
U.S. Treasury debt prices were slightly lower, after a
weaker-than-expected reading for a mid-Atlantic business
activity index erased most losses prompted by better than
expected U.S. economic data.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 4/32, with the yield at 3.436 percent, while the 2-year
U.S. Treasury note <US2YT=RR> was down 1/32, with the yield at
0.9353 percent.
At the longer end of the yield curve, the 30-year U.S.
Treasury bond <US30YT=RR> was down 4/32, with the yield at
4.2806 percent.
(Additional reporting by Jeremy Gaunt and David Brett;
editing by Andrew Hay)
(jeremy.gaunt@thomsonreuters.com; +44 207 542 1028; Reuters
Messaging: jeremy.gaunt.reuters.com@reuters.net))
