(Updates to afternoon, changes byline)
By Steven C. Johnson
NEW YORK, Sept 11 (Reuters) - U.S. stocks fell on Thursday
in choppy trade as concerns about the financial sector dulled
the allure of riskier assets, offsetting falling oil prices.
Shares of Lehman Brothers <LEH.N> sank to a 3-1/2-year low
after the struggling investment bank failed to announce any
definitive deals that would raise capital to cover losses on
mortgage-related investments. For more see [].
Hopes that authorities might work out a plan to stabilize
the U.S. investment bank briefly helped the stock trim losses,
but did little to assuage broader fears about financials.
"There are worries about the survivability of Lehman," said
Giri Cherukuri, head trader at OakBrook Investments in Lisle,
Illinois. "People are evaluating the news from Lehman from
yesterday, and they are thinking that Lehman is in big trouble
again. The fallout is going throughout the financial stocks."
The S&P financial sector index <.GSPF> was down 1.3 percent
after slumping more than 4 percent. Shares of Washington Mutual
<WM.N>, the biggest U.S. savings and loan, also fell sharply on
fears it will be unable to find a buyer or raise enough capital
to cover its own mortgage losses.
The Dow Jones industrial average <> was down 23.53
points, or 0.21 percent, at 11,245.39. The Standard & Poor's
500 Index <.SPX> was down 2.16 points, or 0.18 percent, at
1,229.88. The Nasdaq Composite Index <> was up 0.80
points, or 0.04 percent, at 2,229.50.
Shares of Lehman Brothers were last down 37.7 percent at
$4.52 after dipping to $3.88, the lowest since January 1995.
The U.S. Treasury Department, asked about the steep fall in
Lehman stock, said it was continuing to monitor markets and was
keeping in touch with market participants. [].
The U.S. Federal Reserve declined to comment on Lehman, a
day after the No. 4 U.S. investment bank failed to announce
definitive deals to raise much-needed capital.
"There is speculation that maybe there's going to be some
kind of resolution with Lehman, maybe the Treasury steps in and
gets some people together as you head towards the weekend so
that there's some resolution by Monday," said Bobby Harrington,
head of block trading at UBS in Stamford, Connecticut, adding:
"It's just speculation. We don't know that for sure."
Washington Mutual Inc <WM.N> sank 12.9 percent to $2.02 as
investors worried about the companies' mortgage-related losses
and capital needs.
Shares of American International Group Inc <AIG.N> fell
12.6 percent to $15.29. as investors fear the world's largest
insurer may post another loss in the third quarter.
Despite the persistent financial concerns, other banks'
stocks turned positive. JPMorgan Chase <JPM.N> rose 1.4 percent
to $39.96 while Wells Fargo <WFC.N> gained 3.3 percent to
$32.76, both helping to limit losses on the S&P 500.
Oil fell $1.69 to $100.89 per barrel <CLc1>, helping the
stock market pare losses. But some investors saw oil's recent
sharp slide from a record above $147 a barrel in July as
worrisome as it suggests slower growth in the global economy.
That could be bad news for energy shares, said Joe Saluzzi,
co-manager of trading at Themis Trading in Chatham, New Jersey.
"People are watching oil, especially after energy's rally
yesterday," he said. "They're maybe thinking that group's
washed out now."
Among the biggest gainers on the S&P were shares of
Allergan Inc <AGN.N>, which jumped 10.2 percent to $60.15 after
the company said its popular Botox wrinkle smoother also worked
as a treatment for adults suffering from chronic migraines,
according to clinical data. [].
(Additional reporting by Ellis Mnyandu and Walter Brandimarte;
Editing by James Dalgleish)
