* Gold hits all-time high at $1,300 an ounce
* Bond prices up as U.S. stocks halt 4-week rally
* Euro weakens on debt concerns after hitting 5-month high
(Updates with U.S. markets close)
By Walter Brandimarte
NEW YORK, Sept 27 (Reuters) - Gold hit a record high of
$1,300 per ounce and U.S. Treasury prices surged on Monday on
renewed worries about euro-zone debt and expectations the
Federal Reserve will further ease monetary policy.
U.S. and European stocks slipped as investors, increasingly
concerned about the fiscal condition of Ireland and Portugal,
reassessed the strength of the equity markets' four-week rally.
Nikkei stock futures traded in Chicago <NKZ0> fell 5 points to
9,550.00.
European debt fears also weighed on the euro, although the
dollar posted only modest gains against other major currencies
as expectations that the Fed will pour money into the U.S.
economy sapped the greenback.
"The euro right now is being pulled in a tug of war between
the sovereign debt crisis still existing in the euro zone
versus the prospect of a very serious QE2 (another round of
quantitative easing) out of the U.S.," said Boris Schlossberg,
director of FX research at GFT in New York.
"We had a big run after the Fed statement last week. We're
pretty much in seesaw action."
Gold benefited from the prospects of more monetary
stimulus, which could prove inflationary down the road, as well
as from some investors' flight-to-quality bid.
Spot gold <XAU=> traded at $1,294.10 an ounce after hitting
an historic $1,300 an ounce, compared with $1,295.60 quoted
late in New York on Friday.
"Momentum is still very much in favor of gold," said Jesper
Dannesboe, senior commodity strategist at Societe Generale. "I
wouldn't dare go against it, and definitely wouldn't want to be
short. There's good appetite to buy."
Investors snapped up U.S. Treasury debt, driven by their
desire for safer investments and healthy demand at an auction
of new two-year government debt in the afternoon.
The price of the benchmark 10-year U.S. Treasury note
<US10YT=RR> shot up 21/32, with the yield at 2.5314 percent,
down from late Friday's 2.612 percent. The 30-year bond
<US30YT=RR> climbed over a point, up 40/32, with the yield at
3.7233 percent, down from 3.798 percent in late Friday
trading.
On Wall Street, the major U.S. stock indexes declined in
spite of a flurry of corporate mergers and acquisitions.
Worries about euro-zone debt resurfaced after credit agency
Moody's slashed its rating on some lower-grade debt of Anglo
Irish Bank. For details, see [].
The Moody's downgrade offset early optimism with the M&A
activity, and forced investors to rethink the reasons that have
bolstered U.S. stocks during the past four weeks.
"We are nearing the end of the quarter. We've had a very
strong month," said Peter Jankovskis, co-chief investment
officer at OakBrook Investments in Lisle, Illinois. "We may be
in for a bit of consolidation here."
The Dow Jones industrial average <> declined 48.22
points, or 0.44 percent, to end at 10,812.04, while the
Standard & Poor's 500 Index <.SPX> lost 6.51 points, or 0.57
percent, to finish at 1,142.16. The Nasdaq Composite Index
<> fell 11.45 points, or 0.48 percent, to 2,369.77.
Europe's FTSEurofirst 300 index <> of top shares
closed down 0.43 percent, while the MSCI All-Country World
equity index <.MIWD00000PUS> dipped 0.07 percent.
ANXIETY IN THE EURO ZONE
The euro slid 0.27 percent against the U.S. dollar to
$1.3451, after reaching a five-month high earlier in the
session, following Moody's decision to cut Anglo Irish Bank's
unguaranteed senior debt by three notches and its subordinated
debt by six.
Investors have been nervous about possible restructuring of
Anglo Irish Bank's subordinated debt as government guarantees
for such instruments expire later this week.
The dollar fell to a session low of 84.11 yen <JPY=EBS> on
the electronic trading platform EBS, its weakest level since
Japan intervened in the currency market about two weeks ago.
U.S. crude oil <CLc1> inched up 3 cents, or just 0.04
percent,to settle at $76.52 a barrel. During Monday's choppy
session, oil futures traded lower for most of the day. Weak
global stock markets kept a damper on oil prices as the outlook
for economic recovery raised questions about energy demand.
(Reporting and writing by Walter Brandimarte; Additional
reporting by Angela Moon, Vivianne Rodrigues, Ellen Freilich,
Barani Krishnan and Robert Gibbons in New York, and Humeyra
Pamuk in London; Editing by Jan Paschal)
