(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, April 23 (Reuters) - U.S. stocks were mostly
lower on Wednesday as new worries about bond insurer Ambac
dragged down financial shares, offsetting optimism about
technology sector earnings, while the euro posted its biggest
drop against the dollar in three weeks.
Oil eased from a record high of nearly $120 a barrel on
Tuesday after crude oil stocks in the United States rose more
than expected last week.
The euro fell as soft economic data and comments by
European policy-makers indicated a weak U.S. currency is
hurting economic growth in the euro zone, curbing expectations
that the European Central Bank will further increase interest
rates.
Ambac Financial Group<ABK.N> on Wednesday posted a
surprising wide first-quarter loss, and its shares plunged 41.6
percent to $3.52 amid worries about its outlook.
Financial shares <.GSPF> declined 1.2 percent as investors
fretted anew about the impact of the subprime mortgage fallout.
"Ambac lost more money than people thought," said Al
Goldman, chief market strategist at Wachovia Securities in St.
Louis. "That was kind of a shock to the system, but I think
that is a worry that will be on the back burner soon."
The Nasdaq, however, rose on strong results from chipmaker
Broadcom <BRCM.O> and expectations that iPod maker Apple
<AAPL.O> will deliver robust earnings when it reports after the
bell on Wednesday.
The Dow Jones industrial average <> was up 0.81 points,
or 0.01 percent, at 12,721.04. The Standard & Poor's 500 Index
<.SPX> was down 1.35 points, or 0.10 percent, at 1,374.59. The
Nasdaq Composite Index <> was up 14.63 points, or 0.62
percent, at 2,391.57.
An above-consensus earnings report from Boeing Co. <BA.N>,
however, lifted investor optimism.
"Boeing's earnings were very impressive and that has helped
the market," said Warren Simpson, managing director at Stephens
Capital Management in Little Rock, Arkansas.
"But until the financials get out the mess that they've
got themselves into the market's going to struggle," he said.
Results at Boeing, which has been beset by delays with its
787 Dreamliner, easily beat Wall Street forecasts on increased
deliveries of commercial planes and more efficient
manufacturing operations.
Broadcom, meanwhile, beat its quarterly revenue target and
forecast sales growth in the current quarter, relieving
investor concern about enterprise spending in a weak U.S.
economy.
Broadcom shares surged more than 13 percent and Boeing's
stock added 5 percent.
In Europe shares ended a volatile session in positive
territory as optimism over earnings outside the financial
sector helped offset concern about more banking write-downs.
The FTSEurofirst 300 index <> of top European shares
rose 0.7 percent at 1,313.20 points.
Optimism in the technology sector and bid talk in
industrials helped push up shares in chip equipment maker ASML
<ASML.AS> by 7.7 percent and in France's Alstom <ALSO.PA> by
4.6 percent on talk that telecoms and construction group
Bouygues <BOUY.PA> may increase its stake in the group.
"The earnings season has come in a bit better so far and we
have had a representative sample" of companies reporting, said
Philippe Gijsels, a strategist for Fortis Bank in Brussels.
"Outside financials, things are fairly good, especially in
technology, where we've had some good figures," he said.
Demand for the euro fell after the decline in manufacturing
and comments by European Central Bank Governing Council member
Christian Noyer dampened speculation of further rate hikes.
The RBC/NTC Eurozone Purchasing Managers Index for
manufacturing dropped to 50.8 in April, near a three-year low.
German manufacturing activity also fell, although both German
and euro zone readings for the service economy rose.
"The market may have gotten ahead of itself betting on a
rate hike by the ECB," said Omer Esiner, a market strategist at
Ruesch International in Washington.
The euro <EUR=> fell 0.50 percent to $1.5907, while the
dollar rose major trading-partner currencies, with the U.S.
Dollar Index <.DXY> up 0.63 percent to 71.792.
Against the yen, the dollar <JPY=> rose 0.39 percent to
103.39.
Euro zone government bonds rose as markets scaled back
expectations for a possible boost to ECB interest rates.
The latest weekly fuel inventory data from the U.S. Energy
Information Administration showed a bigger-than-expected rise
in crude oil inventories and a big drop in gasoline stocks,
which pushed oil prices lower.
"There's plenty of crude out there," said Phil Flynn,
analyst at Alaron Trading.
U.S. light sweet crude oil <CLc1> fell 4 cents, or 0.03
percent, to $118.03 per barrel.
Gold shed more than 2 percent as the dollar gained ground
and oil beat a retreat.
After midday, spot gold prices <XAU=> fell $12.10 to
$905.20.
The 30-year U.S. Treasury bond <US30YT=RR> fell over a full
point in price in curve-steepening trades and rising concerns
about growing inflation.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 12/32, with the yield at 3.745 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
2.2143 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 30/32, with the yield at 4.5088 percent.
Asian shares shrugged off near-$120 a barrel oil and a weak
dollar to resume an equities rally that has recovered all the
ground lost last month.
MSCI's index of Asian stocks outside Japan <.MIAPJ0000PUS>
rose 1.1 percent, and has gained 17.4 percent since March 18.
Japan's Nikkei average index <> forged ahead early in
the day but gave up most of its gains to close up 0.2 percent.
(Reporting by Kristina Cooke, Vivianne Rodrigues in New York
and Jane Merriman, Atul Prakash in London; Editing by Leslie
Adler)
