* Wall Street rally fizzles on American Express news
* Euro hits 5-week high versus dollar as safe-havens wane
* Bonds, gold also fall as higher stocks erode safety bid
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, March 16 (Reuters) - A rally on Wall Street
fizzled on Monday after American Expressed said credit card
defaults were on the rise, undermining hopes of bank stability
that had eased safe-haven buying of gold, debt and the dollar.
American Express Co <AXP.N> said late in the session that
U.S. credit card delinquencies rose to 8.70 percent in February
from 8.30 percent the month before as job losses accelerated
and the economy deteriorated.
Optimism over a semblance of stability in banking shares
had lifted stocks around the world for a fifth straight session
before the American Express announcement dragged stocks lower.
Oil rose more than $1 a barrel as the rally in global
equity markets outweighed a decision on Sunday by the
Organization of Petroleum Exporting Countries to keep
production pat and not cut output further.
The euro hit a five-week high against the dollar, U.S. and
euro zone government debt prices fell and gold slipped as the
worldwide equity rally cut the appeal of safe-haven assets.
Britain's Barclays <BARC.L> became the latest bank to say
it began 2009 on a strong footing, echoing a refrain heard from
the executives of major U.S. banks last week and helping spark
on either side of the Atlantic.
But investors were skeptical that the flight to safety was
over, expressing that view even as U.S. stocks rallied more
than 2.0 percent.
"The jury is still out on whether we are seeing a dead cat
bounce or if the rally in the euro is sustainable," said
Matthew Strauss, a senior currency strategist at RBC Capital
Markets in Toronto.
The euro <EUR=> was up 0.35 percent at $1.2967, while the
dollar was down against a basket of major currencies, with the
U.S. Dollar Index <.DXY> down 0.23 percent at 87.053. Against
the yen, the dollar <JPY=> was up 0.30 percent at 98.24.
Dan Cook, senior analyst at IGM Markets in Chicago,
acknowledged the equity rally had fed risk appetite, but doubts
remained.
"While we've had a good run for a few days, there's still
not much good news, so we're vulnerable to a reversal," Cook
said.
The Dow Jones industrial average <> closed down 7.01
points, or 0.10 percent, at 7,216.97. The Standard & Poor's 500
Index <.SPX> fell 2.66 points, or 0.35 percent, at 753.89. The
Nasdaq Composite Index <> slid 27.48 points, or 1.92
percent, at 1,404.02.
Global stocks as measured by MSCI's all-country world index
<.MIWD00000PUS> rose 1.2 percent, paring gains of more than 2
percent.
Citigroup <C.N> closed up 30.9 percent, after rising as
much as 51 percent during the session.
Equity markets had shrugged off more dismal economic data
and news that a record $148.9 billion in net overall capital
outflows were recorded in January, the U.S. Treasury said.
[]
The outflows are a worrying development at a time when the
government is rolling out a massive spending plan to break a
14-month recession.
But comments from Federal Reserve Chairman Ben Bernanke on
the CBS program "60 Minutes" on Sunday that the U.S. recession
could probably come to an end this year and "we'll see recovery
beginning next year" overshadowed the news. []
Shares in Barclays surged almost 23 percent, helping push
European shares higher, with the pan-European FTSEurofirst 300
<> index of top shares was up 2.7 percent higher at
provisional close at 720.88 points.
Investors were still skittish about whether the stock rally
can last, said Darren Winder, strategist at Cazenove in
London.
"I think this is a strong rally, but the corporate and
macro newsflow is still quite poor so understandbly people are
questioning whether we see some retrenchment of these gains,"
Winder said.
"We are probably going to run into some profit-taking in the
near term," he said.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
17/32 in price to yield 2.96 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 2/32 in price to yield 1.00 percent.
Oil rose after OPEC's move.
"We believe OPEC's decision not to cut production is a sign
of strength, not weakness, and expect the markets to rally in
conjunction with the global equity markets," said Chris Jarvis,
senior analyst at Caprock Risk Management in Hampton Falls, New
Hampshire.
U.S. light crude <CLc1> settled up $1.10 at $47.35 after
falling to as low as $43.62 a barrel earlier. London Brent
crude <LCOc1>, which expires Monday, settled down 95 cents, at
$43.98.
Gold ended lower as economic optimism and concerns about
further consolidation in an overbought market kept bullion
investors on the sidelines.
U.S. gold futures for April delivery <GCJ9> settled down
$8.10 at $922.00 an ounce in New York.
(Additional reporting by Ellis Mnyandu, Steven C. Johnson, and
Chris Reese in New York; writing by Herbert Lash)
