(Repeating to additional subscribers)
By Richard Satran
NEW YORK, Jan 29 (Reuters) - Global equities and commodities retreated on
Wednesday as fresh signs of a sagging U.S. economy greeted financial markets
and the U.S. Federal Reserve as it met to decide its interest rate action.
The dollar also fell after a report that the U.S. gross domestic product in
the fourth quarter staggered to growth of just 0.6 percent, half what was
expected.
U.S. Treasury bonds made little headway despite the promise of Fed action,
as mixed signals kept trading indecisive. The rapidly slowing GDP raised hopes
for an interest rate cut, although price data came in uncomfortably high and
private job figures climbed.
European stocks and the dollar moved lower after UBS bank <UBSN.VX>
unveiled $4 billion in new write-downs, stirring fears of a deepening credit
crisis. UBS was among the hardest-hit of the banks around the world that have
collectively suffered more than $100 billion in losses from the crisis
originating from defaults in U.S. subprime mortgages.
The big Swiss bank's charges reminded investors that the Fed action can do
nothing to help results in the earnings season starting now on Wall Street.
"The fourth-quarter reporting season will be a real acid test for the
banks," said Franz Wenzel, strategist at AXA Investment Managers in Paris.
"Most of the banks will try to put all the write-downs in their 2007 results as
they want to clean the balance sheet going forward."
The UBS report also set the tone for the dollar, which has been moving
lower this year on the view that the Fed has no choice but to keep rates down
to stimulate an economy stunted by a financial crisis.
Commodities fell as well. Copper, one of the most economically sensitive
commodities, lost more than 2 percent in early New York trade. Gold -- an
important inflation gauge -- shed as much as 1 percent.
Despite the weak GDP, private data provider ADP said in another report that
130,000 new private-sector jobs were created in January, nearly three times the
consensus forecast and painting a much brighter picture than bonds had been
priced for.
Further muddying the picture, inflation outside food and energy spiked well
above the U.S. central bank's comfort range in the fourth quarter.
The dollar index fell to 75.342 <.DXY>, its lowest since Jan. 15 after the
GDP data, but traded back up to 75.521, slightly down on the day.
The Dow Jones industrial average <> was down 33.57 points, or 0.27
percent, at 12,446.73. The Standard & Poor's 500 Index <.SPX> was down 4.00
points, or 0.29 percent, at 1,358.30. The Nasdaq Composite Index <> was
down 7.30 points, or 0.31 percent, at 2,350.76.
Benchmark 10-year notes <US10YT=RR> were down 6/32 and yielding 3.70
percent, up two basis points. Bond yields move inversely to prices.
(Reporting by Gertrude Chavez-Dreyfuss, Ellis Mnyandu and Pedro Nicolaci da
Costa; Writing by Richard Satran; Editing by Jonathan Oatis)
