* U.S. stocks rise after Lehman results
* Dollar rises as recovery theme overshadows Lehman loss
* Safe-haven bid in bonds fades in wake of Tuesday rally
* Oil falls despite OPEC's surprise cut to crude output
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Sept 10 (Reuters) - A stronger U.S. dollar and
falling oil prices helped ease investor jitters on Wednesday as
U.S. stocks rose on a view that troubles at Lehman Brothers
will not cause the global credit crisis to worsen.
An unexpected cut in crude production by the Organization
of Petroleum Exporting Countris and a steep drop in U.S.
inventories lifted energy company stocks, but crude oil futures
prices fell.
The dollar rose, scaling a fresh 11-month peak against the
euro as ebbing oil prices boosted the U.S. currency. At one
point the euro dropped to as low as $1.4039 <EUR=>, a level
last seen in October 2007.
U.S. government debt tumbled after Lehman <LEH.N>
announced steps that investors said could help it bolster its
capital position. The embattled bank posted a $4.09 billion net
loss but Lehman officials said they do not believe the No. 4
U.S. investment bank needs to raise more funds.
European shares fell as miners retreated and banking shares
suffered, while euro zone government debt futures see-sawed in
volatile trade as investors digested Lehman's plans.
After world equity markets rose sharply on Monday and
plunged on Tuesday, investors sighed relief that Lehman didn't
cause further upheaval even as U.S. and European financial
shares again took a beating in the face of slowing growth.
"The market still has an acute case of the financial
jitters but investors have concluded that we're not going off
the edge of Niagra Falls," said Fred Dickson, market strategist
at D.A. Davidson & Co in Lake Oswego, Oregon.
Exxon Mobil <XOM.N> rose 2.2 percent and the S&P energy
index <.GSPE> gained 2.8 percent.
A positive outlook from chip maker Texas Instruments
<TXN.N> boosted the U.S. technology sector. Tech bellwether
International Business Machines <IBM.N> climbed 4 percent at
$119.62, making it a top boost on the Dow.
Washington Mutual <WM.N> was the day's second biggest loser
on the New York Stock Exchange. Worries about more mortgage
losses at the biggest U.S. savings and loan pushed its stock
down 20 percent at $2.65.
Before 1 p.m., the Dow Jones industrial average <> was
up 74.34 points, or 0.66 percent, at 11,305.07. The Standard &
Poor's 500 Index <.SPX> was up 7.91 points, or 0.65 percent, at
1,232.42. The Nasdaq Composite Index <> was up 21.01
points, or 0.95 percent, at 2,230.82.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.45 percent at 79.767. Against the yen,
the dollar <JPY=> fell 0.92 percent at 107.79.
The euro <EUR=> fell 0.56 percent at $1.4056.
Banks were the top negative drag in Europe, with the Dow
Jones banks index <.SX7P> of 62 European banks off 2.48
percent. Only seven components rose.
Credit Agricole <CAGR.PA>, France's biggest retail bank,
said it would cut 500 jobs at Calyon, its investment banking
unit that has been badly hit by the global credit crunch.
Credit Agricole fell 4.8 percent, Dexia <DEXI.BR> shed 3.7
percent, Royal Bank of Scotland <RBS.L> dropped 3.6 percent and
Barclays <BARC.L> slipped 5.3 percent.
"There's no direct link between Lehman's problems and
Europe, but this is the normal financial reaction," said
Christophe Donay, strategist at Paris-based Kepler Equities.
"It's more bad news. It shows that the fallout from the
credit crunch is far from over."
Miners also suffered, tracking a decline in metals prices.
Oil fell even as OPEC cut its daily production ceiling to
28.8 million barrels from earlier targets of 29.67 million
barrels, ministers said, despite expectations it would keep
existing output allocations.
U.S. government data showed total product demand off 3.8
percent in the four-weeks ending Sept. 5 after the
International Energy Agency cut its forecasts for global demand
in Oil
Gold eased as crude prices gave up their gains and the
dollar rose, denting gold's appeal as a currency hedge.
U.S. light sweet crude oil <CLc1> fell 40 cents to $102.86
a barrel.
Spot gold prices <XAU=> fell $13.60 to $762.30 an ounce.
Debt prices also fell after a steep rally earlier this week
that took benchmark U.S. Treasury yields near their lowest
levels since April. The fatigued market sold off as there were
few buyers in need of bonds after Tuesday's rally.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
14/32 to yield 3.62 percent. The 30-year U.S. Treasury
bond<US30YT=RR> fell 26/32 to yield 4.22 percent.
Asian shares fell about 1 percent overnight on fears that
Lehman Brothers' difficulty in raising capital after the U.S.
bailout of Fannie Mae and Freddie Mac showed the credit crisis
was far from over.
Tokyo's Nikkei share average <> pared losses to close
down 0.4 percent after briefly touching a six-month low.
The Asia-Pacific index of shares traded outside of Japan
was 1 percent lower <.MIAPJ0000PUS>.
(Reporting by Ellis Mnyandu, John Parry, Lucia Mutikani and
Gertrude Chavez Dreyfuss and Atul Prakash and Jan Harvey in
London)
(Writing by Herbert Lash. Editing by Richard Satran)
