* Stocks extend two-week fall but late rally trims losses
* Euro falls versus the U.S. dollar despite Irish bailout
* Retailers off on profit-taking after two-week climb
* Indexes down: Dow 0.4 pct; S&P 0.1 pct, Nasdaq 0.4 pct
* For up-to-the-minute market news see []
(Updates to close)
By Edward Krudy
NEW YORK, Nov 29 (Reuters) - U.S. stocks edged down in a
low-volume session on Monday on worries Europe's credit crisis
will spread despite a weekend agreement to bail out Ireland.
But stocks finished well off their lows of the day as the
dollar retraced some of its earlier gains and energy and
financial stocks rallied late in the session.
While stocks tracked movements in the euro on Monday, a
strong U.S. jobs report on Friday could bring the focus back to
the economy and break the strong tie between U.S. equities and
the euro.
The correlation between the euro and stocks has become more
pronounced in recent weeks as the euro zone's debt problems
resurfaced, with traders selling the euro and stocks together.
"Tell me what the euro's going to do and I'll tell you
where the (stock) market is going to go," said Michael James,
senior trader at regional investment bank Wedbush Morgan in Los
Angeles.
Banks and energy stocks outperformed the wider market as
crude oil futures <CLc1> rose 2.3 percent and banks recovered
some of their recent losses.
The KBW bank index rose 1 percent, helped by Bank of
America <BAC.N> , which climbed 1.5 percent to $11.31, while
Exxon Mobil <XOM.N> reversed earlier losses to close up 0.3
percent at $69.45
Light volume added to volatility, and traders turned their
attention to technical markers in the absence of more
fundamental news. The S&P 500 bounced off its 50-day moving
average, preserving the lower end of its recent trading range.
In the wake of a stronger-than-expected start to the
holiday shopping season, investors took profits on a two-week
rally in retail stocks. The S&P retail index <.RLX> fell 0.7
percent.
The Dow Jones industrial average <> dropped 39.51
points, or 0.36 percent, to 11,052.49. The Standard & Poor's
500 Index <.SPX> fell 1.64 points, or 0.14 percent, to
1,187.76. The Nasdaq Composite Index <> lost 9.34 points,
or 0.37 percent, to 2,525.22.
European Union finance ministers endorsed an 85 billion euro
loan package to help Ireland bridge its deficit, but investors
worried how the 16-nation bloc might handle a wider crisis
involving Spain and Portugal. []
The CBOE Volatility index <.VIX>, known as Wall Street's
fear gauge, rose 3 percent to hit its highest level since early
October, indicating anxiety among investors was increasing.
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To watch Reuters Insider report "Upside resistance for S&P
500 is 1,220 short term" click: http://r.reuters.com/vas57q
For graphs on U.S. holiday shopping, click on
http://r.reuters.com/fuc67q
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The 22-day correlation coefficient between the euro and the
popularly traded E-Mini S&P futures has risen to 0.54, which
shows a meaningful relationship between the two assets compared
with an insignificant 0.06 correlation two weeks ago. For a Q+A
on the correlation, see []
The problems in Europe overshadowed signs of improving
sentiment among consumers heading into the high-spend holiday
season.
The number of shoppers in stores over the long U.S.
Thanksgiving holiday weekend rose 8.7 percent compared with
2009, according to a private survey. []
Online retailer Amazon.com Inc <AMZN.O> rose 1.3 percent to
end at $179.49 after hitting a record high $181.84 on
expectations of solid sales on "Cyber Monday," a day of steep
discounts for online shoppers.
FedEx Corp <FDX.N> added 4.7 percent to $91.59 after Credit
Suisse raised its rating on the package shipping company.
(Reporting by Edward Krudy; Editing by Kenneth Barry)
