(Updates to Wall Street close)
* Weak Microsoft, Nokia results hit U.S., European stocks
* Yen holds near 13-year peak vs dollar; sterling weak
* Geithner confirmation vote timing unclear
* Treasuries weaken on debt issuance fears, China remarks
By Steven C. Johnson
NEW YORK, Jan 22 (Reuters) - Wall Street swooned on
Thursday after a surprisingly grim earnings report from
Microsoft, following European shares lower, while anxious
investors kept the yen near a 13-1/2-year peak against the U.S.
dollar.
U.S. President Barack Obama's nominee to head the Treasury
Department, Timothy Geithner, won approval from a Senate panel,
but it remained unclear how soon the full Senate would act on
his confirmation, adding another element of anxiety.
The vote could come later on Thursday, but also could be
pushed into next week if one or more Republicans object to a
swift vote.
"We are basically leaderless in Treasury," said Tim
Ghriskey, chief investment officer of Solaris Asset Management
in Bedford Hills, New York. "It's an overhang right now and we
need some leadership."
Even without his status confirmed, Geithner was a
significant factor in financial markets. He lifted the dollar
when he said a strong dollar is in the U.S. national interest,
and sent U.S. government longer-dated bond prices lower after
saying Obama believes China was manipulating its currency.
China is the biggest holder of U.S. Treasuries, with some $682
billion as of November.
U.S. stocks fell after Microsoft <MSFT.O> said it would cut
up to 5,000 jobs over 18 months and would not offer new profit
forecasts for the rest of the fiscal year.
For full story see [].
Microsoft, the world's top software maker company, blamed
weak personal computer sales, which undercut sales of its
Windows operating system. Its shares fell 11.7 percent, its
biggest one-day percentage loss in more than eight years.
"It is a negative surprise for the market, certainly from a
bellwether technology company," said Richard Sparks, senior
equities analyst at Schaeffer's Investment Research in
Cincinnati, Ohio. "For Microsoft to miss its guidance, it
brings home the pervasive fallout from the credit crisis."
The Dow Jones industrial average <> closed down 105.3
points, or 1.3 percent, at 8,122.80. The Standard & Poor's 500
Index <.SPX> dropped 12.74 points, or 1.52 percent, to 827.50.
The Nasdaq Composite Index <> ended lower by 41.58 points,
or 2.76 percent, at 1,465.49.
Another batch of dismal U.S. economic data, this time on
housing and jobs, also weighed on shares. []
European shares also fell for a fourth straight day. The
FTSEurofirst 300 <> index of top European stocks fell 0.8
percent, led lower by a 9 percent slump in Nokia shares
<NOK1V.HE> after the company reported disappointing earnings.
U.S. crude oil <CLc1> prices settled 12 cents higher at
$43.67 per barrel, as optimism for an aggressive stimulus
package from the Obama administration helped it claw back from
steep losses earlier in the day that had been sparked by large
stockpile increases in the latest week.
GOVERNMENT DEBT CONCERNS
The dollar lost 0.6 percent to 88.77 yen <JPY=> after
falling to 87.10 yen on Wednesday, the lowest since 1995.
The dollar rose against most other major currencies, with
the euro dipping 0.3 percent to $1.30 <EUR=> after Geithner
reiterated support for a strong dollar. Sterling was down 0.76
percent at $1.3873 <GBP=> after fears about the UK banking
sector on Wednesday drove it to its lowest level since 1985.
The British currency has fallen around 6 percent this week.
Geithner's remarks on China, however, weighed on Treasury
debt prices, pushing the benchmark 10-year note <US10YT=RR>
down 14/32 in price, with the yield at 2.60 percent.
Expectations of a slew of U.S. debt issuance flooding the
market have been weighing on Treasuries, and some investors
worried the possibility of a tougher U.S. line on Chinese
currency policy could prompt Beijing to purchase less debt.
"The Geithner comments on China coupled with the massive
supply is weighing heavily on the long end of Treasuries," said
Andrew Brenner, analyst at MF Global Inc in New York.
Sovereign debt worldwide has been under some pressure on
concerns that governments will have to borrow huge amounts to
help fund packages designed to support their economy.
Worries about fiscal balance have driven the cost of
insuring sovereign debt of many major economies to record highs
in recent sessions, according to credit default swaps data.
Investors are also demanding more compensation to hold less
liquid euro zone debt than benchmark German government bonds.
Spreads of French 10-year bonds over German Bunds are
around 60 basis points, the widest since the euro's inception.
(Reporting by Reuters bureaus worldwide; Editing by Chizu
Nomiyama)
