(Recasts with U.S. markets, adds byline; dateline previous
LONDON)
By Herbert Lash
NEW YORK, March 27 (Reuters) - Renewed central bank efforts
to ease a global credit crisis buoyed investor sentiment on
Thursday, pushing up European shares and lifting some U.S.
stocks, as the dollar rose on hopes for a mild U.S. slowdown.
U.S. Treasury debt prices fell, driven by a perception
credit market strains might lessen, which would dull the lure
of safe-haven U.S. government debt.
Oil rose to more than $106 a barrel on supply concerns
after saboteurs blew up a major pipeline in Iraq and sharply
reduced exports from the south of the country.
The oil gain was limited by a firmer dollar, which rallied
after steep losses the last two sessions as concerns eased
about a sharper U.S. economic slowdown. Data showing the U.S.
economy growth in the fourth quarter was in line with market
expectations and a separate report showed jobless claims
declined in the latest week.
European shares rose to a two-week high as comments by the
European Central Bank that it would pump extra liquidity as
needed propelled shares in the battered banking sector.
Also, the central banks of Britain and Switzerland added
extra funds to ease pressure on high interbank lending rates.
Investors also took comfort in a speech by a regional
president of the Federal Reserve who reinforced a view that
policy-makers will do what it takes to ease the credit crunch.
The Fed has been forced to broaden its policy arsenal in
order to minimize the effects of the crisis on a vulnerable
economy, said Cleveland Fed President Sandra Pianalto.
Turbulent times called for extraordinary measures, she said.
"Now the Fed is out saying they have a responsibility to
fund banks, trying to inject calm into the markets. The Fed is
going to stand in there," said Sal Arnuk, co-manager of trading
at Themis Trading in Chatham, New Jersey:
U.S. stocks shed earlier losses but technology shares
remained under the weather on fears of a slowdown after Oracle
Corp's <ORCL.O> quarterly revenue missed Wall Street
estimates.
Technology stocks were the biggest drags on the benchmark
Standard & Poor's 500 Index <.SPX>. Oracle slid about 7.5
percent while Google Inc <GOOG.O> fell 3.5 percent after Lehman
Brothers cut its first-quarter profit forecast on expectations
a weakening economy that could hurt advertising budgets.
The Dow Jones industrial average <> rose 15.80 points,
or 0.13 percent, to 12,438.66. The Standard & Poor's 500 Index
<.SPX> gaomed 2.96 points, or 0.22 percent, to 1,344.09 while
the Nasdaq Composite Index <> fell 11.33 points, or 0.49
percent, to 2,313.03.
European shares closed up 1 percent, lifted by financial
shares.
The FTSEurofirst 300 index <> of top European shares
gained 1 percent to close at an unofficial 1,271.03 points,
having risen by as much as 1.7 percent earlier in the day.
HSBC <HSBA.L> gained 1.1 percent, while Banco Santander
<SAN.MC> rose 1.2 percent and HBOS <HBOS.L> and Natixis
<CNAT.PA> gained 2.6 to 3 percent.
"The market is still very, very jittery but I think it
wants to believe that the central banks can solve the problem,"
said Andrew Lynch, a portfolio manager at Schroders.
Asian stocks fell as financials slipped on concerns over
bank earnings, but gains in commodities helped cushion the
fall.
Bank shares, including Japan's Mitsubishi UFJ <8306.T> and
Australia's Macquarie Group <MQG.AX>, were among the biggest
decliners after downgrades of big U.S. commercial banks and a
profit warning from Deutsche Bank <DBKGn.DE> on Wednesday.
Tokyo's Nikkei <> closed 0.8 percent lower and MSCI's
index of other Asian shares <.MSCIAPJ> fell 0.03 percent.
Economic data released early in the New York session did
not change expectations of further U.S. interest rate cuts to
boost a weakening economy, but it eased concerns about a much
sharper slowdown.
"The numbers this morning had an impact on the dollar.
We'll take any upside surprise we can get at this point," said
Rhonda Power, corporate trading manager at Travelex Global
Business Payments in Toronto.
"But there are still some significant concerns about the
economy. With this subprime situation unresolved, we think
there is still negativity in the market," she added.
In midday New York trading, the euro <EUR=> was down 0.4
percent on the day at $1.5777, a bit more than 1 cent below
last week's record highs above $1.59. But the euro was still up
more than 8 percent this quarter, remaining on track for its
strongest quarterly performance since late 2004.
Against the yen, the dollar rose 0.7 percent to 99.680 yen
<JPY=>. The dollar gained half a percent against the Swiss
franc to 0.9937 <CHF=>.
Oil's gain was limited by a firmer U.S. dollar.
"Today's action was driven up by the explosion and catching
fire of a pipeline in Iraq, but then the market sold off on the
jobless numbers," said Nauman Barakat of Macquarie Futures USA.
"This in turn strengthened the dollar."
U.S. crude <CLc1> was up 43 cents to $106.33 a barrel by
1411 GMT, having earlier risen as high as $107.70. London Brent
crude <LCOc1> advanced 52 cents to $104.51.
Gold eased but analysts said sentiment was positive and the
metal may retest the $1,000-mark in the near term.
The metal, traditionally seen as a hedge against oil-led
inflation, was also expected to get support from strong oil
prices that jumped after an oil pipeline explosion in Iraq.
Spot gold <XAU=> hit a high of $954.50 an ounce before
falling, down from $949.00/949.80 in New York on Wednesday.
At midday, the price of the benchmark 10-year Treasury note
<US10YT=RR>, which moves inversely to its yield, was down 4/32,
its yield at 3.50 percent, up from 3.46 percent on Wednesday.
(Reporting by Justin Grant, Ellen Freilich, Gertrude
Chavez-Dreyfuss in New York and Amanda Cooper, Atul Prakash,
Ikuko Kao and Alex Lawler in London)
(Writing by Herbert Lash. Editing by Richard Satran)
