* U.S. stocks slip on Dell, oil; European shares close up
* Dollar gains, to posts its best month since October 1992
* Oil slips even as Gustav is poised to slam Gulf Coast
* 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) - The dollar rose on Friday as
it ended its best month in a over a decade, helping push oil
prices lower as damage fears eased despite projections Gustav
will barrel into the United States as a dangerous category 3
hurricane.
Fifteen to 30 foot storm surges were expected to accompany
Gustav as early next week when it slams the U.S. Gulf Coast,
home to major parts of the U.S. energy complex.
U.S. Treasury debt prices fell, hit by economic data that
was stronger than expected and signs of rising inflation in a
key indicator.
But U.S. stocks fell hard after Dell warned that companies
are cutting technology spending worldwide, while the data added
to market jitters before a long U.S. Labor Day weekend.
"The market is just very fragile. There's not a lot of
support going into the Labor Day weekend," said Gary Wolfer,
senior portfolio manager at Univest Wealth Management & Trust
in Souderton, Pennsylvania.
"The Dell news has compounded the downside move. When you
have a non-financial company missing its earnings, that's
disconcerting to the market," Wolfer said.
The Dow Jones industrial average <> closed down 171.47
points, or 1.46 percent, at 11,543.71. The Standard & Poor's
500 Index <.SPX> fell 17.93 points, or 1.38 percent, at
1,282.75. The Nasdaq Composite Index <> slid 44.12 points,
or 1.83 percent, at 2,367.52.
European shares rose, and differing views about the pace
of inflation in Europe and the United States sent debt prices
on either side of the Atlantic in opposite directions.
Slowing regional inflation in Europe led two-year euro zone
government bond prices to rise and reduced the chance for an
interest rate hike. But concerns about rising inflation in the
United States pushed U.S. government 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.
The euro <EUR=> fell 0.21 percent at $1.4668.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.23 percent at 77.306. Against the yen,
the dollar <JPY=> fell 0.59 percent at 108.81.
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 index was showing its best monthly gains since
October 1992, Reuters data showed, while the euro was on pace
for its worst monthly loss since its launch in 1999.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
10/32 to yield 3.83 percent. The 30-year U.S. Treasury bond
<US30YT=RR> slipped 24/32 to yield 4.43 percent.
"The U.S. data contrasts with weaker reports from abroad as
the global economy deepens its slowdown," said Joe Manimbo, a
currency trader at Ruesch International in Washington. "This is
a continuation of the more upbeat sentiment on the U.S.
currency."
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 13.8
percent.
Shares of companies sensitive to higher fuel costs, such as
retailers and airlines, tumbled as oil rose above $118 a
barrel. Gustav strengthened back into a hurricane on Friday.
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
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 in Europe 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.
Oil prices slipped after earlier rising.
U.S. crude oil futures for October delivery settled at
$115.46 barrel, down 13 cents after flirting with $119 a barrel
earlier in the day. London Brent crude dropped 15 cents to
$114.02 a barrel.
"Right now there is still uncertainty on where exactly
Gustav will hit, and so it is difficult to determine the damage
that the storm might bring," said Mark Waggoner, president of
Excel Futures in Huntington Beach, California.
U.S. gold futures ended lower in quiet trading, erasing
gains after an initial oil rally over Gustav fears gave way.
December gold futures <GCZ8> settled down $2 at $835.20 an
ounce in New York.
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. Editing by Richard Satran)
