* Dow Industrials close below 10,000 on thin volumes
* World stocks rise off 7-wk lows after European earnings
* Euro rises, investors await Bernanke economy speech
By Daniel Bases
NEW YORK, Aug 26 (Reuters) - Benchmark U.S. shares closed
at seven week lows on Thursday, marring an otherwise positive
day in global equity markets as sentiment turned negative in
thin seasonal trade ahead of a key speech by Federal Reserve
Chairman Ben Bernanke.
While the U.S. stock market fell, pulling the Dow Jones
Industrial average below the psychologically significant 10,000
mark, it was just the opposite in Europe and Japan where prices
rebounded.
In Europe, strong earnings helped boost shares from five
week closing lows and in Japan, buyers stepped in after
four-days of losses to pull the Nikkei up from a 16-month
trough.
The euro advanced against the greenback and yen, which
helped bolster crude oil prices more than 1 percent but did not
give spot gold a lift.
Data showing new weekly U.S. jobless benefit claims fell
more than expected last week were still too high to signal a
shift in the weak labor market that is constraining economic
growth.
"The best the bull can say is that the recovery is evening
itself out now, it's not accelerating any more," said Linda
Duessel, market strategist at Federated Investors in
Pittsburgh.
"We think it's a soft patch and not a double dip, but the
market is pricing more and more for a double dip, so you're
vulnerable to the upside," she said.
Bernanke speaks on Friday at an annual Fed meeting in
Jackson Hole, Wyoming. While he is likely to signal his views
about prospects for the U.S. economy he may not offer clues on
whether the Fed will try to shore up growth with another round
of cash injections.
"Labor market weakness remains the primary concern in the
economy," said Dana Saporta, economist at Credit Suisse.
"That's something that Bernanke has to address at his Jackson
Hole speech tomorrow."
At the close of trade, the Dow Jones industrial average
<> fell 74.25 points, or 0.74 percent, to 9,985.81, its
lowest point since early July. The Standard & Poor's 500 Index
<.SPX> lost 8.11 points, or 0.77 percent, to 1,047.22. The
Nasdaq Composite Index <> dropped 22.85 points, or 1.07
percent, at 2,118.69.
REBOUND
Elsewhere, strong corporate earnings aided Europe's
markets. The FTSEurofirst 300 <> index of top European
shares closed 0.9 percent higher at 1,020.27 points.
French bank Credit Agricole <CAGR.PA> rose 2.7 percent on
an 89 percent rise in second-quarter net profit, miner
Kazakhmys <KAZ.L> gained 5.2 percent after its underlying
first-half earnings per share jumped 130 percent and French
hotel group Accor <ACCP.PA> rose 3.9 percent on doubling of
core profit.
MSCI's main gauge of global equities <.MIWD00000PUS> was up
0.33 percent after hitting its lowest level since July 7 on
Wednesday. The Thomson Reuters global stock index <.TRXFLDGLPU>
was 0.13 percent higher.
"Companies have been reporting reasonable results," said
David Buik, partner at BGC Partners. "But whether a rally can
be sustained is to be seen. There is nothing to say the bad
news is all over."
With only a few companies left to report for the second
quarter, Thomson Reuters Proprietary Research shows U.S. S&P
500 <.SPX> had average earnings growth of 38.4 percent in the
recent reporting season.
Markets have been balancing good corporate profit results
with signs that growth in the U.S. economy is slowing.
EURO RISES
In currencies, safe-havens such as the yen and the Swiss
franc extended their rallies ahead of Bernanke's speech.
Any statement from Bernanke on continuing or increasing
economic stimulus measures could dent the dollar given that
European authorities are perceived as more given to austerity
than the U.S.
"A second round of quantitative easing will likely put
sharp downward pressure on the dollar, to some degree versus
the euro and other G10 currencies, with potential for a broader
dollar sell-off," said Steven Englander, Citigroup's global
head of G10 currency strategy.
The euro rose 0.47 percent to $1.2716 <EUR=> while the
dollar fell 0.18 percent against the yen <JPY=>, retesting its
the 15 year-low reached on Tuesday.
Investors will also get a chance to hear what Bank of Japan
Governor Masaaki Shirakawa has to say on the yen or monetary
policy in Jackson Hole.
The dollar index, a gauge of the greenback's performance
against a basket of six major currencies, fell 0.47 percent to
82.872 <.DXY>. It hit 83.556 on Tuesday, a six-week high.
The benchmark 10-year U.S. Treasury <US10YT=RR> rose 16/32
in price, yielding 2.48 percent after solid auction demand.
Benchmark U.S. crude <CLc1> settled at $73.36, up 84 cents
per barrel. Spot gold slipped $4.95 to $1,234.05 <XAU=>
(Additional reporting by Dena Aubin, Ryan Vlastelica and
Vivianne Rodrigues, Jeremy Gaunt, Naomi Tajitsu, Joanne
Frearson and Christopher Johnson; Editing by Kenneth Barry)
