(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, March 28 (Reuters) - U.S. stocks were mixed on
Friday, as a benign reading on February inflation was offset by
retail sales and consumer sentiment data that suggested a
recession is near, while oil fell more than $1 amid a broad
sell-off in commodities.
Longer-dated U.S. Treasury debt prices rose, aided by the
favorable data on February inflation.
The dollar edged higher against the euro and Swiss franc
after it neared record lows in early trading, supported at the
margin by improving money market conditions that helped ease
the impact of otherwise bleak U.S. economic data.
Data showing a more-than-expected rise in U.S. February
personal income was offset by the smallest increase in spending
since September 2006, which suggested consumption was not
providing its usual support to the economy.
The euro rose as high as $1.5839, within striking distance
of last week's record $1.5904, but gains were later trimmed and
the dollar rebounded on the rise in U.S. personal income.
European stocks closed lower.
U.S. stocks rose on the inflation data, but the gains were
trimmed on the weak retail data, including a profit warning
from J.C. Penney Co Inc <JCP.N>.
The department store operator's shares fell almost 7
percent after the company cut its first-quarter earnings
outlook following weak Easter sales and said it expects the
environment to remain difficult throughout 2008.
That stoked fears the second half of the year will not
bring relief to the flagging U.S. economy.
"We got a boost from the inflation data. but there are
concerns about consumer confidence with J.C. Penney cutting its
outlook," said Joe Saluzzi, co-manager of trading at Themis
Trading in Chatham, New Jersey.
Benchmark U.S. stock indexes were mixed at midday. The Dow
Jones industrial average <> was down 7.66 points, or 0.06
percent, at 12,294.80. The Standard & Poor's 500 Index <.SPX>
was down 0.27 point, or 0.02 percent, at 1,325.49. The Nasdaq
Composite Index <> gained 1.87 points, or 0.08 percent, to
2,282.70.
European stocks closed lower as weakening shares of banks
and consumer product groups overshadowed a rally in mining
stocks, buoyed by upbeat brokerage comments.
The FTSEurofirst 300 <> index of top European shares
closed down 0.54 percent at 1,264.68 points, according to
unofficial data.
The benchmark European index ended the week with a gain of
about 3.5 percent as investors started to come back to stocks,
hammered over the past few months by concerns over the global
credit crisis as well as fears of a U.S. recession.
"We're starting to see some relief in the wake of quite
decisive actions from the Fed and there is some hope that the
worst of the financial crisis and most of the write-downs are
behind us," said Ad van Tiggelen, senior strategist at ING
Investment Management.
"But chances are that we will see new lows in the coming
months, so I would still describe this rise more as a bear
market rally than as a start of a new bull market," he said.
Oil fell to below $106 a barrel as Iraq's pipeline system
was restored after disruption by a bomb attack on Thursday.
U.S. crude <CLc1> dropped $1.75 to $105.83 a barrel by 1510
GMT, after settling $1.68 higher on Thursday.
London Brent crude was $1.11 down at $103.89 a barrel.
Gold fell more than 2 percent in a broad commodities
sell-off, with a rise in the dollar and softer oil prices
dampening the metal's allure as an alternative investment.
Other key precious metals, base metals and major soft
commodities traded lower, with investors pocketing profits
before the end of the quarter.
Gold <XAU=> fell to $926.50 before rising to $933.30/934.20
an ounce, against $951.80/952.60 in New York late on Thursday.
A tapering off of inflation last month helped long-dated
U.S. government debt. Inflation erodes the value of
fixed-income securities.
Benchmark 10-year Treasury note prices <US10YT=RR> rose
4/32, while their yields eased to 3.51 percent from 3.54
percent late on Thursday. Thirty-year bonds <US30YT=RR> rose
10/32, their yields easing to 4.36 percent from 4.38 percent on
Thursday.
Foreign exchange investors were cheered by news that the
inter-bank cost of borrowing short-term sterling, euro and
dollar funds fell. Banks are starting to anticipate slightly
easier funding conditions in the second quarter, which begins
next week.
"Ultimately, what the currency market is watching is the
fact that Libor rates are falling, suggesting slightly easier
funding conditions," said Kathy Lien, chief currency strategist
at DailyFX.com in New York.
In midday New York trading, the euro was down 0.2 percent
at $1.5750 <EUR=>, still within striking distance of last
week's record peak. Against the yen, the euro slipped 0.2
percent to 156.93 <EURJPY=>.
(Reporting by Kristina Cooke, Ellen Freilich and Gertrude
Chavez-Dreyfuss in New York, and Santosh Menon, Atul Prakash
and Bate Felix in London)
(Writing by Herbert Lash; Editing by Dan Grebler)
