* Wall Street dips as mixed data offsets strong earnings
* Treasuries gain on CIT jitters after 3-day sell-off
* US dollar recovers after hitting 6-week low on earnings
* Oil hovers near $61 barrel, Chinese growth adds support
(Updates with U.S. markets activity, changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, July 16 (Reuters) - Risk aversion returned to
markets on Thursday, supporting the U.S. dollar and government
bonds, after mixed economic data, while concern about the
possible failure of a small U.S. lender sparked caution
following the week's robust gains in stocks.
Oil hovered around $61 a barrel as worry about the strength
of global fuel demand was offset by news of strong economic
growth in China.[]
The U.S. dollar initially fell to a six-week low against
major currencies after JPMorgan's reported record investment
banking and trading results, providing further evidence of
recovery in the financial system, but weak U.S. manufacturing
data and concern about the impact of the possible failure of
U.S. lender CIT <CIT.N> re-introduced a bid for safer-assets.
[]
CIT's talks about aid with the U.S. Treasury ended
Wednesday night, leaving the lender to its own devices, and
endangering the future of some of the one million customers of
the lender to small businesses. U.S. Treasury debt prices
rallied after three days of falls partly on a resulting
flight-to-safety bid
A fall in a reading of the Federal Reserve Bank of
Philadelphia's index of business conditions in the U.S.
Mid-Atlantic region to minus 7.5 in July from minus 2.2 the
month before also helped push up bond prices. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
20/32 in price to yield 3.53 percent. The 2-year U.S. Treasury
note <US2YT=RR> was up 4/32 in price to yield 0.96 percent.
"We are in a difficult position at the moment because we
are caught on the cusp between is this a sense of sustainable
recovery or a possibility of a relapse?" said Richard McGuire,
fixed income strategist at RBC Capital Markets in London.
"There's no real convincing evidence yet on either side,"
he said.
European shares hit a one-month closing high on improved
sentiment following JPMorgan's results and data that showed the
number of U.S. workers claiming new jobless benefits fell last
week.
But U.S. stocks faltered after a run-up this week that
pushed the benchmark Standard & Poor's 500 Index up 6.1
percent, the best three-day rally following a surge after U.S.
equities hit a decade low in March.
Shortly after 1 p.m. (1700 GMT), the Dow Jones industrial
average <> was up 3.18 points, or 0.04 percent, at
8,619.39. The Standard & Poor's 500 Index <.SPX> was down 1.30
points, or 0.14 percent, at 931.38. The Nasdaq Composite Index
<> was up 3.41 points, or 0.18 percent, at 1,866.31.
The FTSEurofirst 300 <> index of top European shares
ended 0.4 percent higher at 866.81 points, fourth straight
advancing session.
The number of U.S. workers filing new claims for jobless
benefits fell last week to their lowest since January, but the
seasonally adjusted government data was again distorted by
earlier layoffs in the automotive industry. []
"There's a lot of conflicting data here, and I think that
the market is reflecting that," said Kim Caughey, senior equity
research analyst at Fort Pitt Capital Group in Pittsburgh.
Asian shares across the region outside of Japan
<.MIAPJ0000PUS> rose 1.3 percent to their highest since
mid-June, while Japan's benchmark Nikkei <> underperformed
with a rise of 0.8 percent.
China reported economic growth quickened to 7.9 pct in the
second quarter, beating forecasts. []
The U.S. dollar was down against a basket of major
currencies, with the U.S. Dollar Index <.DXY> off 0.02 percent
at 79.299.
The euro <EUR=> was up 0.14 percent at $1.4124, while
against the yen, the dollar <JPY=> was down 0.74 percent at
93.56.
Crude oil prices fell as investors tried to decide how high
oil prices can rise given a still fragile global economy, said
Mike Fitzpatrick, vice president at MF Global in New York.
U.S. light sweet crude oil <CLc1> fell 49 cents to $61.05 a
barrel.
"$60 is the fulcrum balancing the price lever that tips
whenever one contention or another is bolstered by news or
economic data," Fitzpatrick said.
Gold slipped as the dollar pared losses against the euro,
with lacklustre demand for physical stocks of the metal also
pressuring prices. [] Spot gold prices <XAU=> fell
$1.20 to $937.25 an ounce.
(Reporting by Rodrigo Campos, Ellen Freilich, Steven C.
Johnson in New York; Atul Prakash, David Sheppard and Emelia
Sithole-Matarise in London; writing by Herbert Lash)
