* Government stimulus plans support global risk appetite
* Wall St slides on banking fears following Lloyds' losses
* Disappointing U.S. consumer mood also weighs on Wall St
* U.S. crude oil prices jump more than 6 pct
By Walter Brandimarte
NEW YORK, Feb 13 (Reuters) - Hopes for the implementation
of government stimulus packages rekindled some appetite for
risk on Friday, encouraging investors to move out of safe-haven
government bonds and gold, although Wall Street slipped on
renewed banking sector fears.
Oil prices rallied, sending energy stocks higher across the
globe, but bank shares declined after Britain's Lloyds Banking
Group <LLOY.L> posted hefty losses for 2008. For details, see
[].
"There is speculation that we are going to see a larger
(U.S. government) package than we thought we were going to see,
including subsidies, and that is weighing on the (bond) market"
said Thomas di Galoma, head of U.S. Treasury trading at
Jefferies & Co. in New York.
But Wall Street was also pressured by a
bigger-than-expected fall in U.S. consumer confidence for
February, which sank back to November levels, according to a
Reuters/University of Michigan survey. []
As a result, the main U.S. stock indices seesawed between
negative and positive during the morning. At 1 p.m. (1800 GMT),
the Dow Jones industrial average <> was down 87.85 points,
or 1.11 percent, at 7,844.91, while the Standard & Poor's 500
Index <.SPX> lost 9.23 points, or 1.11 percent, at 825.96. The
Nasdaq Composite Index <> was off 0.68 percent.
Still, hopes for substantial government stimulus efforts
supported sentiment in other markets, encouraging investors to
venture out of the safety of government bonds.
Among those stimulus actions, the U.S. Congress was set to
vote later on Friday on President Barack Obama's $789 billion
economic package, while Australia's parliament pushed through a
$27.4 billion plan. A program to subsidize mortgages for U.S.
homeowners is also on the works in Washington.
U.S. benchmark 10-year notes <US10YT=RR> traded 26/32 lower
in price for a yield of 2.8785 percent, and gold spot prices
<XAU=> fell $9.80, or 1.03 percent, to $937.10.
Prices of U.S. crude oil <CLc1> rose $2.13, or 6.27
percent, to $36.11 per barrel.
In Europe, the FTSEurofirst 300 index <> closed 0.56
percent higher at 796.12, even as Lloyds' shares slumped more
than 30 percent.
"The Lloyds statement has led to further devastation across
the banking sector. Activity and volumes are very thin today.
There is an air of quietness and it only takes one shock to
send it down," said Howard Wheeldon, strategist at BGC
Partners.
Emerging equity markets also benefited from the increased
appetite for risk. The MSCI stock index for the asset class
<.MSCIEF> gained 2.0 percent while yield spreads between
emerging-market bonds and U.S. Treasuries tightened 17 basis
points to 661 basis points on the benchmark JPMorgan EMBI+
index <11EMJ>.
G7 MEETING EXPECTATIONS
Optimism about a U.S. mortgage subsidy program helped the
U.S. dollar gain 0.96 percent against the yen, at 91.74.
The Japanese currency also weakened on expectations that
the Group of Seven finance ministers may single it out for
excessive strength at this weekend's meeting in Rome.
But the euro gained 0.13 percent against the dollar, at
$1.2878, after three consecutive sessions of losses, as
investors squared positions ahead of the G7 meeting.
The European currency posted gains even after data showed
the euro zone economy recorded its deepest contraction on
record in the fourth quarter of 2008.
(Additional reporting by Chris Reese and Gertrude
Chavez-Dreyfuss in New York, Joanne Frearson in London; Editing
by Dan Grebler)
