* Euro rebounds from 4-year low; investors still cautious
* U.S. stocks stage late-day comeback as Dow ekes gains
* Oil pares losses, settles at $70.50 per barrel
(Updates with close of U.S. markets)
By Jennifer Ablan
NEW YORK, May 17 (Reuters) - U.S. stocks staged a late-day
comeback on Monday, reversing a 184-point drop, as the euro's
rebound from a four-year low temporarily offset fears that
euro-zone austerity measures could stifle global growth.
Given the euro zone's debt problems, the euro has become a
proxy for risk appetite, rising and falling in tandem with U.S.
stocks.
The Dow Jones industrial average <> finished up 5.67
points, or 0.05 percent, at 10,625.83, while the benchmark
Standard & Poor's 500 Index <.SPX> was up 1.26 points, or 0.11
percent, at 1,136.94. The Nasdaq Composite Index <> was up
7.38 points, or 0.31 percent, at 2,354.23.
"Things got a little oversold and things were getting a
little overdone on the downside recently," said Stephen
Massocca, managing director at Wedbush Morgan in San Francisco.
Front month June crude oil also pared losses. U.S. light
sweet crude oil <CLc1> settled down $1.53, or 2.14 pErcent, to
$70.08 per barrel.
The euro slid to a four-year low at one point before
rebounding, helping take indexes down more than 1 percent
earlier in the day as investors fretted that the steps some
euro-zone nations are taking to cut their budgets will hinder
economic growth.
Late Monday, the euro <EUR=> stabilized and settled up 0.28
percent at $1.2394 from a previous session close of $1.2360,
after earlier falling to a four-year low of $1.2234.
European equities managed to close only slightly lower,
with declines in mining shares cushioned by gains in defensive
shares such as food producers and drug makers. The pan-European
FTSEurofirst 300 index <.FTEU> closed down 0.12 percent at
1,013.06 points.
U.S. government bond prices fell as investors snapped up
beaten-down shares.
German Chancellor Angela Merkel said on Sunday that the $1
trillion European Union-International Monetary Fund bailout
plan agreed a week earlier has only bought the euro zone time
to tackle its fundamental problem: a yawning gap between its
strongest and weakest economies. [].
For most of the day, U.S. stocks struggled due to
disappointing economic data. A gauge of manufacturing in New
York state showed a slower growth rate in May, raising concerns
about the economic recovery. [].But fears of
fallout from the euro-zone debt crisis weighed most heavily on
investor sentiment.
Despite the late-day rally in U.S. equities, investors are
still keeping close watch on any contagion stemming from the
euro zone.
Alan Lancz, president at Alan B. Lancz & Associates Inc in
Toledo, Ohio, said, "It's a matter of executing and building in
the austerity plans and putting them in place, so that you're
not just throwing a lot of money at a situation with a lot of
debt and increasing the problem without changing the underlying
root of the problem."
Earnings outlooks also have been a concern. Lowe's Cos
<LOW.N> the No. 2 U.S. home improvement chain, gave a
disappointing profit forecast for the rest of the year. The
chief executive of Lowe's, Robert Niblock, said on a call with
analysts that some estimates of economic growth have started to
come down.
Shares of Lowe's fell 3.11 percent to $25.26.
"We have a recovery but it is a feeble one. If you load
onto that recovery a severe dose of fiscal austerity, the
prospects then for a sustainable recovery" are strained," added
Mike Lenhoff, chief strategist at wealth manager Brewin
Dolphin.
MAJOR EQUITY MARKETS SEESAW
World stocks as measured by the MSCI All-Country index
<.MIWD00000PUS> were down 0.69 percent. The more volatile
emerging markets index <.MSCIEF> was down 2.09 percent.
In Japan the Nikkei <> fell more than 225 points, or
2.17 percent, to a 10-week closing low, mirroring falls in the
rest of the region as investors ignored encouraging economic
data from the United States, Japan and Singapore
[] [] [].
Weakness in the euro and the pound helped the dollar index
<.DXY>, which was up 0.06 percent at 86.147 from a previous
session close of 86.147.
U.S. Treasury debt prices fell.
The benchmark 10-year note <US10YT=RR> was down 9/32 on
Monday, its yield climbing to 3.49 percent. Two-year notes
<US2YT=RR> were down 1/32, with the yield at 0.81. The 30-year
U.S. Treasury bond <US30YT=RR> was down 12/32, with the yield
at 4.36 percent.
Spot gold prices <XAU=> fell $10.90, or 0.88 percent, to
$1,221.60.
The Reuters/Jefferies CRB Index <.CRB> was down 5.35
points, or 2.07 percent, at 253.20.
(Additional reporting by Leah Schnurr in New York and Blaise
Robinson, Jeremy Gaunt and Neal Armstrong in London; Editing by
Kenneth Barry)
