* Wall Street mixed on foreclosure fear, new stimulus
* Fed's Bernanke cements view more stimulus coming
* Dollar rebounds after touching fresh 10-month low
By Daniel Bases
NEW YORK, Oct 15 (Reuters) - Wall Street pared back gains
on Friday as a widening U.S. foreclosure crisis undermined an
initial boost from U.S. Federal Reserve Chairman Ben Bernanke
who said more monetary stimulus was needed.
European share prices turned down in late trade while
Japanese stocks closed lower on profit taking and weak
financial shares in sympathy with the foreclosure crisis.
"The (financial) sector is under pressure with all this
uncertainty surrounding the foreclosure issue and whether or
not the banks could move houses off their books and move on,"
said John Canally, investment strategist and economist for LPL
Financial in Boston.
"This has been an issue that we kept under the rug for a
while but it is now brought back to the front," he said.
All 50 U.S. states have started a joint investigation of
the mortgage industry, focusing on allegations that for years
banks have not reviewed documents properly or have submitted
false statements to evict delinquent borrowers.
[]
The U.S. dollar had a reprieve from a sell-off that has
taken it to 10-month lows against a basket of currencies and an
8-1/2 month nadir against the euro.
However commodity prices remained weak despite the currency
market gyrations. Gold fell from record highs and crude oil
prices slipped.
In mid-morning trade, U.S. stocks traded mixed. The Dow
Jones industrial average <> fell 38.67 points, or 0.35
percent, at 11,055.90. The Standard & Poor's 500 Index <.SPX>
slipped 1.43 points, or 0.12 percent, at 1,172.38.
The Nasdaq Composite Index <> however rose 10.91
points, or 0.45 percent, at 2,446.29, aided by a 10 percent
gain in Google <GOOG.O> following its blow-out announcement of
a 25 percent surge in net revenues in the third quarter.
The KBW Bank share index <.BKX> fell 2.42 percent as
concerns a growing crisis over shoddy U.S. real estate
foreclosure documents deepens, putting at risk a still fragile
economy, let alone housing market. []
The FTSEurofirst 300 <> index of top European shares
was down 0.06 percent at 1,084.01 in late session trade.
The MSCI All-Country World equity index <.MIWD00000PUS>
fell 0.42 percent to 316.32 after it had hit the year's high of
319.45 on Thursday, its best showing since shortly after the
collapse of U.S. investment bank Lehman Brothers in September
2008.
BERNANKE
U.S. inflation slowed unexpectedly in September despite a
pick-up in retail sales, while U.S. consumer sentiment dropped
in early October to its weakest point since July. The data
added weight to the Fed Chairman's view that an environment of
high unemployment and low inflation made "a case for further
action." []
Stocks and commodities have rallied on the expectation that
the Fed will pump more stimulus into the U.S. economy when it
meets Nov. 2-3.
At the same time yields on U.S. Treasuries have plunged
since April as fears the lackluster recovery would prompt more
stimulus and stoke inflation, the bane of the fixed income
asset class. On Friday, Treasuries were mixed and European
government debt prices weakened.
"Everything we've seen economically and from officials
points to weak dollar. The only question left is the size and
scope of (quantitative easing)," said Boris Schlossberg,
director of research at GFT in New York.
CURRENCIES
The dollar index, which tracks the performance of the
greenback versus a basket of six other major currencies,
reversed course to rise 0.22 percent to 76.815 <.DXY>.
The euro <EUR=> fell back from an 8-1/2 month high against
the greenback, trading down 0.50 percent at $1.4008. The
Australian dollar <AUD=D4> drifted down after earlier surging
above parity against the U.S. currency for the first time since
its flotation in 1983.
The dollar cut its losses against the yen to trade down
0.11 percent at 81.35 <JPY=>.
It hit a 15-year low of 80.88 yen on Thursday, only about 1
yen above its record low of 79.75 yen set in April 1995, and
the market remains nervous about the possibility of more
Japanese intervention to curb yen strength.
Currency traders focused on the U.S. Treasury Department's
semi-annual report on currency practices, particularly whether
it will label China as a currency manipulator, a move that
could throw a wrench into Sino-U.S. relations. []
U.S. light sweet crude oil <CLc1> fell 43 cents to $82.26
per barrel. Spot gold <XAU=> fell $10.90 to $1369.40.
(Additional reporting by Wanfeng Zhou, Chuck Mikolajczak,
Tamawa Desai, Jeremy Gaunt, Joanne Frearson and Jessica
Mortimer; Editing by Andrew Hay)
