* MSCI world equity index slightly higher
* Short dated yields fall, US dollar slumps
* Investors wait in U.S. automaker bailout
NEW YORK, Dec 11 (Reuters) - World stocks were little
changed on Thursday as investors continued to wait for
governments to finalize economic stimulus packages including a
bailout for the U.S. automakers.
In the meantime, with year-end balance sheets needs meaning
corporations needed ultra-safe securities on their books, bill
yields fell close to zero and the U.S. dollar slumped.
Central banks are also seen continuing to lower official
interest rates, with the Swiss and South Korean central banks
cutting rates on Thursday, and the Federal Reserve expected to
do so again next Thursday.
The MSCI world stock index was up 1.25 percent around
midday in New York at 222.55.
U.S. investors were waiting to see if the U.S. Congress
would approve emergency financial aid for American automakers,
after the House passed the measure overnight but the plan may
struggle to pass in the Senate. []
Without government help investors fear that a possible
failure or bankruptcy in the U.S. auto sector could send shock
waves through the economy and worsen unemployment.
Shares of General Motors <GM.N> fell 6.3 percent to $4.31
and Ford <F.N> slipped 4.3 percent to $3.11 on the New York
Stock Exchange.
Shares of Chevron <CVX.N> rose 2.4 percent to $80.34,
making the stock the Dow's top gainer as oil prices rose after
the International Energy Agency forecast world oil demand
growth would resume in 2009. [].
The U.S. economic picture also remained bleak after the
Labor Department said the number of people filing for new
unemployment benefits surged to a 26-year high last week as
employers shed workers in anticipation of a tough recession.
"We keep thinking the financial crisis is over and one by
one we find a new industry that is in dire straights," said
Carl Birkelbach, head of Birkelbach Management in Chicago."
"It appears to me that the credit crunch is going to
continue and the ramifications will be negative."
The Dow Jones industrial average <> was up 5.58 points,
or 0.06 percent, to 8,767.00 around midday in New York. The
Standard & Poor's 500 Index <.SPX> was 0.33 points higher at
899.57. The Nasdaq Composite Index <> slipped 2.63 points,
or 0.17 percent, to 1,559.59.
European shares were also weak on Thursday, after three
days of gains, on mounting concerns about a deep recession.
The FTSEurofirst 300 <> index of top European shares
closed 0.8 percent lower at 853.74 points.
"People are looking for direction. The good news is that
the market is not going down on back of bad economic news, but
apart from that you are getting a lot of volatility,"said
Edmund Shing, strategist at BNP Paribas, in Paris.
SHORT TERM YIELDS FALL FURTHER
In world money markets, the rates banks charge each other
for dollar, euro and sterling funds fell again on Thursday,
with the three-month dollar rate below 2.0 percent for the
first time since late 2004.
Central banks pumping cash into the system, massive
interest rate cuts, and government rescue packages have eased
tensions in the interbank market, which had been hit hard by
bank failures such as the collapse of Lehman Brothers in
September.
The Swiss National Bank cut interest rates by 50 basis
points on Thursday, its fourth easing within two months,
buoying the short-end of the market.
In bond markets, U.S. Treasuries prices rose on Thursday as
an unexpectedly big jump in new claims for U.S. jobless
benefits and fears the Senate would not pass an auto industry
rescue plan undermined stocks, spurring the bid for safe-haven
U.S. government debt.
Benchmark 10-year notes <US10YT=RR> rose 11/32, their
yields easing to 2.66 percent from 2.70 percent late on
Wednesday.
In Europe, two-year bond yields <EU2YT=RR> were 6.3 basis
points lower at 2.141 percent, with 10-year yields <EU10YT=RR>
a basis point higher at 3.213 percent.
U.S. DOLLAR SLUMPS TO SIX WEEK LOW
The U.S. dollar fell broadly on Thursday, undermined by
the market's improved appetite for taking risk in other
currencies again as short term U.S. yields fell closer to
zero.
The U.S. currency slid to a seven-week low versus the yen
and a six-week trough against the euro on Thursday.
"I do think people are having a lot of questions about the
Federal Reserve's balance sheet -- the fact that they have
created so much liquidity," said Ken Landon, a currency
strategist at JP Morgan Chase in New York.
"Since dollar funding pressures have come off somewhat,
there are excess dollars right now. This could be one of the
big macro causations at this point," he added.
Having climbed on a wave of risk aversion in recent months
in tandem with the low-yielding yen, some analysts also said
further dollar demand into the year-end from de-leveraging
flows might be showing signs of abating.
In midday New York trading, the dollar fell as low as 91.18
<JPY=>, the lowest since October 24, according to Reuters data.
The euro rose to $1.3292 <EUR=>, a six-week high, and up about
1.8 percent from late on Wednesday.
The ICE dollar index was down 1.6 percent at 84.080 <.DXY>,
its lowest since early November.
The weaker U.S. helped to push gold prices up about 3.0
percent after a 4.0 percent jump on Wednesday.
Spot gold <XAU=> hit a high of $833.80 an ounce.
The other main external driver of gold, the oil price, was
also supportive, ticking up above $46 a barrel as signs emerged
that top exporter Saudi Arabia was preparing to slash January
supplies ahead of next week's meeting of oil cartel OPEC.
(Reporting by Chuck Mikolajczak, Ellen Freilich, Gertrude
Chavez-Dreyfuss in New York, Atul Prakash, Ian Chua, George
Matlock and Jan Harvey in London; editing by Clive McKeef)
