* U.S. stocks slip on Dell, oil; European shares close up
* Dollar gains, posts its best month since January 1997
* Oil rises to $117 with Gustav poised to enter the Gulf
* US debt off on inflation fear; euro debt up as fears ebb
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Aug 29 (Reuters) - Oil prices gained on Friday on
concerns about the threat Tropical Storm Gustav poses to U.S.
energy infrastructure, helping slam U.S. equities, and the
dollar rose as it headed toward its best month since 1992.
U.S. stocks fell more than 1 percent as Dell warned that
companies are cutting back on technology spending worldwide and
economic data added to market jitters before a long U.S. Labor
Day weekend.
Shortly after 1 p.m., the Dow Jones industrial average
<> was down 119.20 points, or 1.02 percent, at 11,595.98.
The Standard & Poor's 500 Index <.SPX> was down 11.80 points,
or 0.91 percent, at 1,288.88. The Nasdaq Composite Index
<> was down 37.63 points, or 1.56 percent, at 2,374.01.
But shares in Europe rose, and differing views about the
pace of inflation in Europe and the United States sent the
price of government debt in opposite directions.
Slowing regional inflation in Europe led two-year euro zone
government bond prices to rise, reducing the chance for an
interest rate hike, while concerns about rising inflation in
the United States pushed U.S. Treasury debt prices lower.
The U.S. dollar gained against the euro after a report
showed business activity in the U.S. Midwest expanded at a far
more robust rate than expected as new orders jumped.
A separate report showed U.S. consumer confidence rose to
its highest in five months in August. The large recovery from
depressed levels was helped by moderating energy prices, and
added to optimism surrounding the surging dollar.
The reports follow data earlier in the week showing
greater-than-expected U.S. economic growth in the second
quarter and strong durable goods orders for July.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.33 percent at 77.385. But against the
Japanese yen, the dollar <JPY=> was down 0.67 percent at 108.73
from a from a previous session close of 77.021.
The euro <EUR=> was down 0.31 percent at $1.4654 from a
previous session close of $1.4720. Against the Japanese yen,
the dollar <JPY=> was down 0.67 percent at 108.73 from a
previous session close of 109.54.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
12/32 to yield 3.83 percent. The 30-year U.S. Treasury bond
<US30YT=RR> fell 28/32 to yield 4.43 percent.
"Again, this stands out as robust relative to what is seen
in Europe and sends a now familiar signal of U.S. manufacturing
competitiveness, notably relative to Europe," said Alan Ruskin,
chief international strategist at RBS Greenwich Capital in
Greenwich, Connecticut. in a note to investors.
Data showed euro zone consumer prices grew at a
less-than-expected 3.8 percent annual clip this month, down
from an all-time peak of 4 percent in July.
The European Commission's survey of inflation expectations
among consumers, which plunged 22 points in August from 30 in
July, provided more good news on inflation ahead of a European
Central Bank meeting next week.
But data showed economic sentiment in the single currency
bloc fell to 88.8 points this month from 89.5 points in July,
below economists' expectations of a fall to 89.1 points.
"For the ECB, the decline in headline inflation and
inflation expectations is good news," said Holger Schmieding,
an economist at Bank of America. "The apparent fall of the euro
zone economy into semi-stagnation or worse also supports market
expectations that the ECB will cut rates eventually."
Dell Inc's <DELL.O> comments about technology spending
sparked fears of weakness in the whole tech sector, as did the
company's surprisingly steep fall in quarterly profit. Shares
of the world's second-largest computer maker fell 12 percent.
Shares of companies sensitive to higher fuel costs, such as
retailers and airlines, tumbled as oil rose above $118 a
barrel. Gustav was poised to enter the Gulf of Mexico, raising
concerns about its impact on U.S. offshore oil and gas output.
Chipmakers were under pressure after diversified U.S.
chipmaker Marvell Technology Group Ltd <MRVL.O> gave a
conservative outlook for the third quarter. Marvel shares fell
3.7 percent to $14.21.
European shares rose for a fourth straight day, led by UK
bank HBOS <HBOS.L> and French retailer Carrefour <CARR.PA>.
Equity strategists saw scant scope for stock markets to
rally.
"We still see no clear trigger for a sustained recovery,"
said UniCredit's Gerhard Schwarz, citing the ongoing credit
crisis, inflation pressures and downward revisions of corporate
earnings estimates.
The FTSEurofirst 300 <> index of top European shares
closed 0.3 percent higher at 1,194.73 points. The index
advanced 1.2 percent for the month, marking only the second
month of gains among the past 10.
Energy companies braced for Gustav, shutting down
production and evacuating personnel from offshore rigs in the
Gulf of Mexico, home to a quarter of U.S. crude oil production
and 15 percent of its natural gas output.
In energy and commodities prices, U.S. light sweet crude
oil <CLc1> rose 55 cents, or 0.48 percent, to $116.14 per
barrel,, and spot gold prices <XAU=> fell $2.55, or 0.31
percent, to $830.70. The Reuters/Jefferies CRB Index <.CRB>
was up 1.33 points, or 0.34 percent, at 394.68.
Asian stocks climbed overnight after after a big upward
revision to second-quarter U.S. economic growth boosted the
outlook for demand.
Japan's Nikkei share average <> finished 2.4 percent
higher, while outside Japan, stocks in MSCI's Asia-Pacific
index <.MIAPJ0000PUS> were up 1 percent.
(Reporting by Steven C. Johnson, Nick Olivari, Chris Reese and
Frank Tang in New York and Santosh Menon and Emelia
Sithole-Matarise in London and Peter Starck in Frankfurt)
(Writing by Herbert Lash)
