* US stocks bolstered as automakers get $17.4 bln lifeline
* Bond prices fall on profit-taking after week's big gains
* Oil falls; growth fear outweigh OPEC plans to cut output
* Dollar rallies against euro, yen after week's big slump
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Dec 19 (Reuters) - U.S. stocks edged higher and
government debt fell on Friday after a $17.4 billion emergency
loan program for Detroit's crippled automakers eased fears of
an imminent industry collapse that would have exacerbated an
already deep U.S. recession.
The U.S. dollar rallied against the yen and the euro,
drawing support from the Japanese central bank's cut in
1
interest rates to nearly zero and extending gains from the
European Central Bank's deposit rate cuts on Thursday.
Oil fell more than 6 percent as concerns about slowing
economic growth weighed more heavily than proposed production
cuts by the Organization of Petroleum Exporting Countries,
which pushed up the price of crude contracts for February
delivery.
The slide in front-month oil, pulled lower by the
expiration of January contracts, helped tumble the stock price
of oil supermajors Exxon Mobil <XOM.N> and Chevron <CVX.N> and
pull the Dow lower.
U.S. Treasury prices fell, pulling yields off historic
lows, as traders booked profits on this week's dramatic gains.
The S&P 500 rose slightly, its third weekly gain, spurred
by the U.S. government's lifeline for the auto industry, which
led shares of General Motors <GM.N> to jump almost 23 percent.
The auto lifeline spurred an early rally on Wall Street,
leading shares of General Motors <GM.N> to jump more than 22
percent before shedding about half those gains.
After climbing more than 2 percent on the bailout
announcement, U.S. stock indexes pared gains, with the Dow even
dipping in and out of negative territory before closing
slightly lower.
"It's relief for the markets," said Tim Ghriskey, chief
investment officer of Solaris Asset Management in Bedford
Hills, New York.
The Nasdaq outperformed the other indexes, boosted by gains
in Oracle Corp <ORCL.O> and Research In Motion <RIM.TO>
<RIMM.O> the day after both companies reported quarterly
results that were better than lowered expectations.
Oracle gained 7 percent and Research In Motion gained 11.4
percent.
The Dow Jones industrial average <> closed down 25.88
points, or 0.30 percent, at 8,579.11. The Standard & Poor's 500
Index <.SPX> rose 2.59 points, or 0.29 percent, to 887.87. The
Nasdaq Composite Index <> added 11.95 points, or 0.77
percent, to 1,564.32.
European markets were less enthusiastic about the bailout,
seen as only a stop-gap solution.
"All this means is that we will get through Christmas and
the New Year without GM or Chrysler filing for Chapter 11,"
said a trader.
Stocks closed lower in a volatile session, weighed down by
commodity shares that tracked declines in crude and copper,
while the bond market barely reacted to the announcement.
Energy stocks took the most points off an index of top
European shares, with BP <BP.L>'s 3.7 percent drop the biggest
drag, followed by a 1.7 percent decline in Total <TOTF.PA>.
The pan-European FTSEurofirst 300 <> index of top
European shares fell 0.45 percent at 823.37 points.
Euro zone government bonds traded in a slim range, with
yields setting fresh historic lows. The 10-year Bund yield
<EU10YT=RR> slipped to 2.937 percent, its lowest since at least
1999, according to Reuters data. The 2-year euro zone
government bond yield <EU2YT=RR> carved out a trough of 1.831
percent, the lowest since the introduction of the euro.
The dollar posted its biggest daily gain in almost two
months, while despite the pullback, the euro was on track to
post a weekly gain of more than 3 percent against the dollar.
Traders said the U.S. currency's slump earlier this week
may have been overdone.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 1.75 percent at 81.10. Against
the yen, the dollar <JPY=> fell 0.32 percent to 89.08 yen.
The euro <EUR=> fell 2.59 percent at $1.3916.
U.S. light crude for January delivery <CLc1>, which expired
on Friday, settled down $2.35 at $33.87 a barrel, the lowest
since February 2004.
The more active February contract <CLG9> settled up 69
cents at $42.36 a barrel with cuts in OPEC production expected
to take hold in that month.
"The market is signaling that it is taking a look at the
OPEC cut and recognizing that is more likely to be evident in
February," said Gene McGillian, analyst at Tradition Energy in
Stamford, Connecticut.
London Brent crude <LCOc1> gained 64 cents, settling at
$44.00.
U.S. gold futures held to lower levels, hit by the dollar's
rally and optimism over the automaker's lifeline.
The February gold contract <GCG9> finished $23.20 lower at
$837.40 an ounce in New York.
The MSCI index of stocks in the Asia-Pacific region
excluding Japan <.MIAPJ0000PUS> slipped 0.5 percent, while the
Nikkei share average in Japan fell 0.9 percent <>.
(Editing by Chizu Nomiyama)
