* Stocks slip as Midwest business report fails to lift
* Dollar higher, yen weakens in light year-end trading
* Crude oil rises as traders assess U.S. cold weather
* U.S. gold drops below $1,100 as dollar rallies
(Updates with U.S. markets, changes byline, dateline,
previous LONDON)
By Herbert Lash
NEW YORK, Dec 30 (Reuters) - The U.S. dollar gained across
the board on Wednesday and tempered a much
better-than-expected reading of business activity in the U.S.
Midwest, which failed to add more upside to this year's huge
stock market recovery.
European shares snapped a six-day winning streak in thin
trade, and U.S. stocks eased, also in light trading. Earlier,
Japan's Nikkei slipped 0.9 percent in its final 2009 session.
The Nikkei banked a 19 percent gain for the year, and
regional European shares were looking at annual gains of about
25 percent, as was the benchmark Standard & Poor's 500 Index.
The dollar rallied as investors looked for signs a
recovery is taking hold. Some traders have moved to safer
assets like the dollar to lock in profits after a strong
2009.
The Institute for Supply Management-Chicago business
barometer surged to a four-year high, topping forecasts, on a
recovery in employment and accelerating new orders.
[]
"The dollar is putting a constraint on stocks, and the
data isn't a big enough story to really overcome that," said
Rob Stein, managing partner of Astor Asset Management in
Chicago.
After midday, the Dow Jones industrial average <> was
down 15.94 points, or 0.15 percent, at 10,529;47. The Standard
& Poor's 500 Index <.SPX> was down 2.69 points, or 0.24
percent, at 1,123.51. The Nasdaq Composite Index <> was
down 5.06 points, or 0.22 percent, at 2,283.34.
The major U.S. stock indexes showed no reaction at midday
to news that New York City police had closed New York City's
Times Square intersection and evacuated the Nasdaq building in
the congested midtown area due to a suspicious vehicle parked
on the street. By early afternoon, the Times Square area was
reopened.
The FTSEurofirst 300 <> fell 0.4 percent to end at
1,043.24 points, pulling back from a 15-month closing high on
Tuesday. The index is on track for its best year since 1999.
Data showed that euro-zone money supply posted a
surprising drop in November and loans to households and firms
fell for the third month running, a warning to the European
Central Bank that it must tread carefully with its exit
strategy. []
The dollar climbed to its highest since early September
against the Japanese yen. []
Concerns about Japan's fiscal health also weighed on the
yen after rating agency Standard & Poor's said Japan's credit
rating could be in danger if policy initiatives fail to
stabilize and gradually reduce the country's debt burden.
[]
The Chicago ISM report bolstered the view of the economic
recovery, analysts said.
"The dollar is gaining some traction and extending gains
from yesterday," said Kathy Lien, director of currency
research at GFT Forex in New York.
The dollar was up slightly against a basket of major
currencies, with the U.S. Dollar Index <.DXY> up 0.08 percent
at 77.891.
The euro <EUR=> was down 0.10 percent at $1.4338.
Against the yen, the dollar <JPY=> was up 0.50 percent at
92.46 after earlier reaching a high of 92.77 yen, its highest
since Sept. 8.
U.S. Treasury debt prices were little changed as investors
mulled whether an auction of seven-year notes later in the day
would be met with much demand. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 5/32 in price to yield 3.82 percent.
Oil rose above $79 a barrel after data from the U.S.
Energy Information Administration showed U.S. crude stockpiles
fell in the week through Dec. 25, although the decline in
inventories was less than expected. For details, see: []
U.S. crude for February delivery <CLc1> rose 66 cents to
$79.53 a barrel in thin trade, after touching a five-week high
the previous day.
London Brent crude for February <LCOc1> rose 72 cents to
$78.36 a barrel.
A cold snap that has hit the main U.S. heating hub on the
Northeast Coast has boosted demand for oil products and helped
drain swollen distillate stocks that this summer were at
26-year highs.
"We are seeing the first signs of a concerted improvement
in U.S. demand and distillates are falling, (high stocks of)
which have been responsible for the bulk of the weakness so
far," said Barclays Capital oil analyst Amrita Sen.
U.S. gold futures dropped for a second day in a row,
trading below $1,100 an ounce as a dollar rally against the
euro dampened demand for the metal as a hedge against paper
currency depreciation. []
Asian stock markets fell as year-end trade dwindled, with
profit-taking pulling down shares
On the final trading day of the year, Japan's Nikkei
average <> slid 0.9 percent, but it gained 19 percent in
2009 after tumbling 42 percent in 2008 -- the biggest loss in
its 58-year history.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up 0.05 percent to 411.63, below its
2009 high set in November, but still up nearly 66 percent this
year.
(Reporting by Ryan Vlastelica, Nick Olivari, Chris Reese in
New York; Dominic Lau and Emma Farge in London; Writing by
Herbert Lash; Editing by Jan Paschal)
