* US stocks slip as drop in crude hurts energy shares
* Oil prices weaken on eased tropical storm concerns
* Euro falls broadly on funding tensions in Europe
By Manuela Badawy
NEW YORK, June 28 (Reuters) - U.S. stocks ended slightly
lower in thin volume on Monday despite a better-than-expected
report on consumer spending and oil prices declined as
concerns eased about the impact on supply from a tropical
storm in the Atlantic.
The euro fell broadly, pressured by bank funding concerns
and caution ahead of more European debt sales this week.
Bankers voiced relief after world leaders abandoned a
global bank levy and eased the timetable for new capital
requirements at a G20 summit in Canada, which posed questions
about the forum's effectiveness. []
Investors bought some global equities earlier in the day,
especially bank shares, after members of the U.S. Congress
hammered out a landmark financial regulation package on
Friday, removing uncertainty, and the G20 dropped a 2012
deadline for more stringent risk-provisioning rules.
But the spotlight, however, remained on the consumer.
On Monday, the government said consumer spending rose
moderately in May after being flat in April. Spending
increased 0.2 percent in May after being flat in April, the
Commerce Department said. That was a touch above market
expectations for a gain of 0.1 percent. For details, see
[].
Investors and analysts are waiting for further evidence
that consumers, whose spending make up roughly two-thirds of
gross domestic product, are reaching deeper into their
pockets.
"What has been driving the market higher has been
expectations that the good manufacturing recovery we've seen
is going to take root and drive the whole economy forward,"
said Peter Jankovskis, co-chief investment officer at OakBrook
Investments LLC in Lisle, Illinois.
"But the big concern there is the consumer has to be the
one to step to the plate and make that happen."
U.S. consumer spending rose slightly more than expected in
May even as savings touched their highest level in eight
months. Consumer spending is being closely watched to gauge
the strength of the economic recovery after a series of
reports suggested growth is slackening. []
A government report on Friday showed consumer spending,
which normally accounts for 70 percent of U.S. economic
activity, rose at a 3 percent pace in the January-March
quarter -- slower than the 3.5 percent the government had
estimated last month.
The Dow Jones industrial average <> shed 5.29 points,
or 0.05 percent, to end at 10,138.52. The Standard & Poor's
500 Index <.SPX> lost 2.19 points, or 0.20 percent, to finish
at 1,074.57. The Nasdaq Composite Index <> fell 2.83
points, or 0.13 percent, to close at 2,220.65.
About 7.08 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, the lowest
volume since April 5 and below last year's estimated daily
average of 9.65 billion.
MSCI's all-country world stock index <.MIWD00000PUS> ended
0.31 percent higher while more risk-sensitive emerging market
counterpart <.MSCIEF> gained 0.45 percent.
European shares snapped four sessions of losses to close
higher, led by banking shares, with sentiment lifted by upbeat
U.S. consumer spending data. The pan-European FTSEurofirst 300
<> index of top shares climbed 1.3 percent to end at
1,026.68 points.
Barclays <BARC.L>, Deutsche Bank <DBKGn.DE> and BNP
Paribas <BNPP.PA> gained 1.5 percent to 3.6 percent,
benefiting from the G20's decision to adopt a more flexible
timetable for lenders to implement new capital rules.
Oil <CLc1> fell to around $78 a barrel after earlier
touching the highest in almost eight weeks, as concern eased
about whether tropical storm Alex would disrupt supply in the
Gulf of Mexico.
Over the weekend, Alex became the first named storm of the
2010 Atlantic hurricane season, which forecasters expect to be
active. They said the storm could become a hurricane on Monday
or Tuesday.
Spot gold <XAU=> retreated 1 percent to $1,240.45, down
from $1,253.40 in Friday's late New York trading and off
Monday's intraday peak at $1,262.45 as investors took some
profits from bullion's recent run.
EURO TUMBLES, BONDS RALLY
The euro <EUR=> slid under $1.23 as interbank euro lending
rates hit their highest in almost seven months. The single
currency's failure to rise above $1.24 and heavy selling in
euro/sterling added to the downward momentum.
Banks must repay 442 billion euros ($545.5 billion) to the
European Central Bank on Thursday, leaving a potential
liquidity shortfall in the financial system of over 100
billion euros.
The Swiss franc hit a record high against the euro and an
eight-week peak versus the U.S. dollar after Swiss National
Bank board member Jean-Pierre Danthine was quoted in the
l'agefi newspaper as saying deflationary risks have
disappeared and Swiss exports have proven to be robust despite
a stronger currency. [].
The euro fell more than 1 percent to a record low 1.3329
franc <EURCHF=>, according to Reuters data. Danthine's
comments came after the SNB had backed off a pledge to fight
excessive appreciation of the franc earlier this month.
Safe-haven U.S. Treasuries rose, pushing benchmark yields
to one-year lows as speculators, emboldened by a recent batch
of subdued economic data, pushed for a break of key technical
resistance levels.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
up 24/32, with the yield at 3.0227 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 1/32, with the yield at 0.6289
percent. The 30-year U.S. Treasury bond <US30YT=RR> was up
34/32, with the yield at 4.0052 percent.
Bonds, investors' choice during weak economic times, have
benefited from poor data going back to May's discouraging jobs
report. The report added bullish momentum to a rally that
began on worries over Europe's fiscal woes.
(Additional reporting by Wanfeng Zhou, Chuck Mikolajczak,
Robert Gibbons and Frank Tang in New York; Editing by Jan
Paschal)
