* Oil slips below $50 a barrel on weakening demand
* Wall Street falls as more bank woes offset data, IBM
* Dollar drops vs euro as U.S. data raises optimism
* Bond prices slide on April consumer confidence jump
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 28 (Reuters) - Oil prices fell and U.S.
stocks turned lower at day's end on Tuesday as worries about
the U.S. financial sector and a potential flu pandemic
overshadowed budding optimism over reassuring economic news.
Sentiment was mixed across financial markets as data that
showed a slowing decline in U.S. home prices and a surprising
reading on consumer confidence whetted some risk appetite.
The dollar slid against the euro, helped by comments from
a European Central Bank official that curbed expectations for
quantitative easing, which pressured the U.S. currency.
"There are certainly green shoots in the U.S. economy,"
said Robert Blake, senior currency strategist at State Street
in Boston. "That's why we have seen a rise in risk appetite
and a pullback in the dollar."
The euro <EUR=> rose more than 1 percent to $1.3155.
U.S. Treasuries, meanwhile, fell after the Conference
Board reported the biggest one-month jump in American consumer
confidence since November 2005.
But worries lingered over the economic impact in the
advent of a flu pandemic. New Zealand and Israel were the
latest countries to confirm cases of a new strain of flu
linked to dozens of deaths in Mexico. (For details, see
[])
U.S. regulators have told Citigroup Inc <C.N> it may need
to raise more capital, sources told Reuters. The Wall Street
Journal reported that Bank of America <BAC.N> also is talking
to the government about its capital condition and the
shortfall could amount to billions of dollars.
[]
The Dow Jones industrial average <> fell 8.05 points,
or 0.10 percent, to 8,016.95. The Standard & Poor's 500 Index
<.SPX> shed 2.35 points, or 0.27 percent, to 855.16. The
Nasdaq Composite Index <> declined 5.60 points, or 0.33
percent, to 1,673.81.
The bond sell-off pushed benchmark 10-year yields above
3.0 percent, seen by some as the Federal Reserve's line in the
sand as it seeks to maintain record-low funding costs to
bolster the U.S. economy and bring an end to a deep
recession.
Copper, viewed as a harbinger of future growth, fell to a
new three-week low as worries about the health of American
banks and flu anxiety continued to deflate recent optimism.
"Sentiment in the market seems to have soured a bit," said
Tom Hartman, a broker with Altavest Worldwide Trading in
Mission Viejo, California. "We went from a great rally in the
first quarter of the year to just a bear market rally ...
there's a lot of turmoil out there."
Although Wall Street closed in negative territory, the
three major indexes recovered from session lows, when they
were more than 1 percent lower.
International Business Machines Corp <IBM.N> rose 2
percent, giving the Dow its biggest boost, after its board
approved a 10 percent dividend increase and authorized a stock
buyback, highlighting resilience in a tough economic climate.
[]
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 0.62 percent at 85.134.
Against the yen, the dollar <JPY=> fell 0.27 percent to
96.37.
ECB Executive Board member Lorenzo Bini Smaghi doused
expectations that the ECB will announce non-standard measures
to combat economic weakness at its policy meeting on May 7.
[]
Oil fell slightly. U.S. crude oil <CLc1> settled 22 cents
lower at $49.92 a barrel, off earlier lows of $48.55. London
Brent <LCOc1> fell 33 cents to $49.99 a barrel.
"Prices remain in a bit of a swoon as market participants
fret that a potential influenza pandemic might prove fatal to
the frail signs of recovery just beginning to show," said Mike
Fitzpatrick, vice president at MF Global in New York.
Gold dropped more than 2 percent on the back of sharply
lower platinum prices amid demand worries and technical
selling, tempting bullion investors to lock in recent
profits.
U.S. gold futures for June delivery <GCM9> settled down
$14.60 at $893.60 an ounce in New York.
U.S. Treasury debt prices were lower.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
26/32 to yield 3.01 percent. The 2-year U.S. Treasury note
<US2YT=RR> fell 2/32 in price to yield 0.95 percent.
European stocks fell but closed off session lows as the
U.S. consumer confidence report partly offset worries about
American banks' capital needs and swine flu, which has killed
some 150 people in Mexico.
The FTSEurofirst 300 <> index of top European shares
ended down 1.5 percent at 801.24.
(Reporting by Chuck Mikolajczak, Gertrude Chavez-Dreyfuss,
Matthew Robinson, Burton Frierson; George Matlock in London
and Peter Starck in Frankfurt; Writing by Herbert Lash;
Editing by Jan Paschal)
