(Recasts with U.S. market closes)
By Herbert Lash
NEW YORK, Feb 27 (Reuters) - The dollar slid through record
lows to push commodities higher and gold to near $1,000 for the
first time on Wednesday, while financial markets meandered as
inflation worries and interest rate optimism competed for
investors' attention.
Stocks initially rose as U.S. Federal Reserve chairman Ben
Bernanke vowed to keep the U.S. economy on track with easier
money and as regulators proposed easier restrictions on the
leading home finance companies to boost the real estate
market.
The U.S. dollar fell to its new lows against the euro as
market participants perceived comments from Bernanke to mean
more interest rate cuts are in store.
The euro <EUR=> was up 1.03 percent at $1.5127 from a
previous session close of $1.4973. Against the Japanese yen,
the dollar <JPY=> was down 0.86 percent at 106.35 from a
previous session close of 107.27.
Equities investors applauded news that a U.S. regulator on
Saturday would lift the investment caps for Fannie Mae and
Freddie Mac, the two largest providers of finance for U.S. home
loans, sparked a rally on Wall Street until investors began to
think the plan through.
"We're right back to the issue of the steps are coming in
place to resolve it, but they're not coming fast enough for
some investors," said Rick Meckler, president of investment
firm LibertyView Capital Management in Jersey City, New
Jersey.
Shares of Fannie Mae, the largest U.S. home financing
company, surged as much as 17 percent and shares of Freddie Mac
climbed as much as 16.6 percent, before both pared gains to the
low single-digit percentages.
"The bottom line is housing is an issue, maybe the biggest
issue, so anything we can do to help that is a net positive,"
said Bill Stone, chief investment strategist for PNC Wealth
Management in Philadelphia.
The plunging dollar triggered a surge across commodities
markets that are viewed as safe havens when it falls. Gold and
oil both shot to records, though crude futures declined later
on a government report of strong supply.
The Reuters-Jefferies CRB Index <.CRB>, which tracks prices
of 19 commodity futures, hit a record high. The index has
gained almost 8 percent since Feb. 13, powered by a run-up in
key commodities such as oil, gold and wheat.
European shares ended lower on worries about the U.S.
economy and as Britain's biggest mortgage lender, HBOS, warned
that financial and housing markets would remain difficult.
HBOS slid 6.8 percent and the pan-European FTSEurofirst 300
<> ended 0.22 percent lower at 1,358.21 points.
Japan's Nikkei average rose to a six-week closing high,
with blue-chip shares such as Sony Corp <6758.T> driving gains.
Hong Kong blue chips hit three-week highs.
The Nikkei average <> rose 1.5 percent to 14,031.30,
the highest close since Jan. 11, while the benchmark Hang Seng
Index <> in Hong Kong ended up 3.2 percent at 24,483.84.
The dollar slumped after Bernanke, in testimony to the U.S.
Congress, said the U.S. central bank will act to ensure
beleaguered housing and credit markets do not further undermine
an already sluggish economy.
"I am convinced they are prepared to ride through inflation
well above their target for the rest of the year at the
minimum. They are going to cut rates as need be to support
economic growth," said Brian Dolan, chief FX strategist at
Forex.com in Bedminster, New Jersey.
In stocks, benchmark indexes were mixed. The Dow Jones
industrial average <> was up 9.36 points, or 0.07 percent,
at 12,694.28. The Standard & Poor's 500 Index <.SPX> was down
1.3 points, or 0.09 percent, at 1,379.89. The Nasdaq Composite
Index <> was up 8.79 points, or 0.37 percent, at
2,353.78.
Treasuries also closed mixed after giving up on an earlier
rally. The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 2/32, with the yield at 3.8636 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
2.0123 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
up 2/32, with the yield at 4.6549 percent.
U.S. crude <CLc1> settled down $1.24 at $99.64 a barrel.
Earlier, it hit an all-time high of $102.08 a barrel, near the
inflation-adjusted peak of $102.53.
London Brent <LCOc1> settled down $1.20 at $98.27, off a
record high of $100.53 touched earlier in the session.
