(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, March 27 (Reuters) - Wall Street stocks fell on
Thursday amid concerns that sluggish Oracle revenue suggests
slower business spending, but the dollar gained on hopes that
results of a Federal Reserve asset swap indicate a
stronger-than-expected banking sector.
The Fed swapped $75 billion of U.S. Treasury securities for
mortgage-backed assets that have sparked a debilitating credit
crisis in an auction aimed at bolstering bank balance sheets.
European shares had gained earlier on renewed central bank
efforts to buoy investor sentiment and ease the credit crunch.
Oil rose sharply after a bomb attack on a major Iraqi crude
pipeline slashed exports from the country's southern oil port
for the first time in years.
U.S. Treasuries prices fell, driven by a perception credit
strains might lessen and dull the lure of safe-haven government
debt. Treasuries extended losses after tepid demand for the
Fed's auction, called a Term Securities Lending Facility.
"That the auction drew less than intense interest may be
the good news. It may be that dealers might not be in as dire
financial straits as had been perceived," said Ward McCarthy,
managing director at Stone & McCarthy Research Associates in
Princeton, New Jersey.
U.S. stocks fell in volatile trade as the news from Oracle
Corp <ORCL.O>, a bellwether for the software industry, fueled a
sell-off in the technology sector. Investors fear a widening
impact of the housing slump on corporate spending.
Oracle was the biggest drag on both the Nasdaq and the
Standard & Poor's 500 Index with a slide of more than 6
percent.
The Dow Jones industrial average <> was down 120.40
points, or 0.97 percent, at 12,302.46. The Standard & Poor's
500 Index <.SPX> was down 15.37 points, or 1.15 percent, at
1,325.76. The Nasdaq Composite Index <> was down 43.53
points, or 1.87 percent, at 2,280.83.
The benchmark 10-year U.S. Treasury note was down 21/32,
with the yield at 3.5412 percent.
European shares rose to their highest close in two weeks
after the region's three biggest central banks agreed to pump
extra liquidity into money markets, lifting financial stocks.
HSBC <HSBA.L> gained 1.1 percent, while Banco Santander
<SAN.MC> rose 1.7 percent and HBOS <HBOS.L> and Natixis
<CNAT.PA> gained around 3 percent.
Gains were tempered by the technology sector as Oracle's
missing Wall Street expectations on Wednesday hit shares in
German software group SAP <SAPG.DE>.
The FTSEurofirst 300 <> index of top European shares
was up 1 percent at 1,271.59 points, a level last seen on March
14.
Oil rose. U.S. crude <CLc1> settled up $1.68 to $107.58 a
barrel, boosting this week's gains to more than 6 percent.
London Brent crude <LCOc1> rose $1.01 to $105.00.
"Today's action was driven up by the explosion and catching
fire of a pipeline in Iraq," said Nauman Barakat, oil trader
and senior vice president at Macquarie Futures USA.
"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.
Tokyo's Nikkei <> closed 0.8 percent lower and MSCI's
index of other Asian shares <.MSCIAPJ> fell 0.03 percent.
A report on U.S. gross domestic product released early in
the New York session did not change expectations of further
U.S. interest rate cuts to boost a weakening economy, but a
surprisingly strong profit component in the report 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.
Gold ended near a one-week peak as a late rally of energy
prices offset a stronger dollar.
Analysts said sentiment was positive as gold, viewed as a
hedge against oil-led inflation, may retest the $1,000-mark
soon on 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
ending at $951.80/952.60 by New York's last quote at 2:15 p.m.
EDT (1815 GMT), down from $949.00/949.80 in New York on
Wednesday. It hit a lifetime high of $1,030.80 an ounce on
March 17.
(Reporting by Ellis Mnyandu, Chris Reese, Lucia Mutikani,
Gertrude Chavez-Dreyfuss, Richard Valdmanis and Frank Tang in
New York and Amanda Cooper and Atul Prakash in London)
(Writing by Herbert Lash. Editing by Richard Satran)
