* World stocks slip as Europe falls, emerging rise
* Italian banks in focus after a capital increase
* Wall Street, oil prices turn positive
(Updates with U.S. stocks and oil turning positive)
By Barani Krishnan
NEW YORK, March 29 (Reuters) - European banking shares
helped lead world stocks lower on Tuesday after an Italian bank
announced a capital increase, while the dollar rose after a top
Federal Reserve official said the U.S. central bank's asset
purchase plan should be curtailed.
U.S. stocks rose on strength in large-cap technology
stocks, but investors remained cautious due to the continuing
global crises and the approach of the end of the first
quarter.
Uncertainty over Libya drove up the price of oil, as
government troops under Muammar Gaddafi halted a rebel advance
aimed at restoring oil exports from the OPEC member.
World stocks as measured by MSCI <.MIWD00000PUS> were down
0.1 percent, after slipping about 0.3 percent earlier, mainly
as a result of weakness in Europe. Emerging market stocks
<.MSCIEF> gained around 0.4 percent.
The surprise announcement by Italy's UBI Banca's <UBI.MI>
of a 1 billion euro ($1.4 billion) capital hike dragged down
Italian banks on speculation that other lenders could be
heading down the same road. UBI shares fell more than 11
percent. Investors also remained cautious ahead of the results
of stress tests on Irish banks, due on Thursday.
The FTSEurofirst 300 <> index of top European shares
was down 0.3 percent.
"We are still very cautious on the banking sector as a
whole," said Felicity Smith, fund manager at Bedlam Asset
Management. "The big problem is that they need to hold more
capital and that means in future, even if the economy grows,
the returns they generate would be lower."
Volume has begun to fall on European bourses in line with
2011 lows on Wall Street.
The Dow Jones industrial average <> was up 36.37
points, or 0.30 percent, at 12,234.25. The Standard & Poor's
500 Index <.SPX> was up 1.48 points, or 0.11 percent, at
1,311.67. The Nasdaq Composite Index <> was up 11.35
points, or 0.42 percent, at 2,742.03.
"The quarter is ending with a lot of uncertainties out
there, resulting in messy intraday moves at the same time that
nothing is really happening," said Michael Shaoul, chairman of
the New York-based Marketfield Asset Management, which oversees
$973 million.
"There's nothing obvious about what investors need to do in
this environment, and that's why you're seeing such low
volume," he said. "No one has any reason to recommit capital."
The Nasdaq was helped by strength in large-cap tech shares.
Amazon.com Inc <AMZN.O> rose 2.2 percent to $173.12 after it
introduced a service offering remote access to music.
Cisco Systems <CSCO.O> rose 1.6 percent to $17.40 after it said
it plans to buy newScale Inc for an undisclosed amount to boost
its cloud computing services.[] []
EURO/DOLLAR
The dollar rose against the euro after the president of the
St. Louis Federal Reserve Bank, James Bullard, told an audience
in Prague that the U.S. economy was strong enough to curtail
the Fed's $600 billion asset purchase program by some $100
billion. [].
The euro hit a session low of $1.4060 on the EBS trading
platform after falling through reported bids at $1.4080. It
last traded at $1.4085 <EUR=>. Traders said reported sovereign
bids at $1.4050 could limit losses in the single currency,
however.
Portugal's debt remained under pressure, with yields on its
10-year bonds near record levels above 8 percent, complicating
the country's attempts to avoid a European Union bailout.
The dollar extended gains against the euro after data
showed U.S. single family home prices fell for a seventh
straight month in January, offering fresh evidence that the
housing market recession in the United States was not over yet.
[].
Meanwhile, the dollar and euro both reached their highest
levels against the yen since since March 18, when the Bank of
Japan and other major central banks intervened to stop runaway
yen gains.
The dollar rose to high of 82.42 yen <JPY=EBS> on trading
platform EBS. The euro rose to 115.86 <EURJPY=R> .It was on
course to test 116.03, above which would mark a 10-month high.
In commodity markets, U.S. crude's benchmark May contract
<CLc1> for May delivery was flat at just above $104 a barrel,
after earlier falling more than a dollar earlier. []
Analysts said Japan's lack of progress in containing the
nuclear crisis was likely to delay the world's third-largest
oil user's return to full industrial strength, but the downside
for oil prices could be limited by unrest in the Middle East.
"We have two factors that are countervailing," said Harry
Tchilinguirian, analyst at BNP Paribas.
"There is a risk premium in the Middle East built in on
risk of further contagion. On the other hand we have the fact
Japan is a major component of the global supply chain, so the
potential for a price correction in the second quarter
remains."
U.S. gold remained under pressure after Monday's losses as
the prospect of interest rate increases undermined its appeal
as an inflation hedge. Copper also slipped as demand from top
consumer China waned. [] []
(Additional reporting by Atul Prakash, Jessica Mortimer and
Richard Leong; Editing by Leslie Adler)
