* Global stock index sags, but Nasdaq jumps on Google results
* U.S. dollar rises vs euro after Bernanke's speech
* Oil falls towards $82, gold slips after Bernanke's comments
* Bond market bets on inflation after low CPI, Bernanke hints
(Adds close of European markets, byline)
By Herbert Lash
NEW YORK, Oct 15 (Reuters) - World stocks fell and the
dollar rebounded from a recent sell-off on Friday as a widening
U.S. foreclosure crisis undermined an initial boost after U.S.
Federal Reserve Chairman Ben Bernanke hinted more monetary
stimulus was on the way.
U.S. Treasury prices fell and yields rose on the notion
Bernanke aims to boost asset prices by creating inflation
through a second round of so-called quantitative easing.
Bernanke said there was a case for further monetary easing,
given high unemployment and low inflation. But despite his most
explicit signal yet, he offered no details on the Fed's next
move. For details see: []
The dollar rose from more than an eight-month low versus
the euro as traders said the greenback's recent declines wenttoo far, too fast even as a sustained rebound seems unlikely.
[]
"The real downside potential of this issue is unknowable.
It could be a multibillion-dollar problem," said Brian Battle,
vice president of trading at the Chicago-based Performance
Trust Capital Partners. "This could end up being a problem with
the financial system like we saw in 2008."
The KBW bank index <.BKX> dropped 1.9 percent in its
third-straight decline.
At 1:12 p.m., the Dow Jones industrial average <> was
down 41.25 points, or 0.37 percent, at 11,053.32. The Standard
& Poor's 500 Index <.SPX> was up 1 point, or 0.09 percent, at
1,174.81. The Nasdaq Composite Index <> was up 23.80
points, or 0.98 percent, at 2,459.18.
The pan-European FTSEurofirst 300 <> index of top
shares inched up 0.1 percent to close at 1,085.59 points.
Sales at U.S. retailers rose a stronger-than-expected 0.6
percent in September, lifted by big-ticket items, while
manufacturing activity in New York state jumped in October, the
New York Fed's "Empire State" business index showed.
But U.S. inflation unexpectedly slowed in September as a
0.8 percent rise in the core Consumer Price Index, which
excludes volatile food and energy prices, through the 12 months
ended in September marked the smallest increase since 1961,
creating a major cause of concern for Bernanke and the Fed.
[]
"Retail sales and the Empire State index were strong,
suggesting the economy is indeed improving. But inflation
remains low and troubling," said Hugh Johnson, chief investment
officer at Hugh Johnson Advisors in Albany, New York.
OIL, GOLD AND BOND PRICES FALL
Oil prices slid and gold fell 1 percent, both in volatile
trading, after bullion earlier had jumped to within a few
dollars of the previous day's record high. []
[]
"The question is, for how much longer the market is
prepared to run just on the quantitative easing story. I think
the market at these levels wants to see the facts before
committing additional capital to the upside," said Saxo Bank
senior manager Ole Hansen.
U.S. light sweet crude oil <CLc1> fell $1.28 to $81.41 a
barrel.
Spot gold prices <XAU=> fell $9.25 to $1,371.00 an ounce.
A stronger dollar makes commodities, like oil, more
expensive for buyers holding alternative currencies.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.26 percent at 76.853.
Against the Japanese yen, the dollar <JPY=> was down 0.21
percent at 81.27.
The 2/10-year German bond yield spread expanded to its
widest in 2-1/2 weeks with the longer end bearing the brunt of
a U.S. Treasury-sparked sell-off following the surprisingly
strong U.S. retail sales data. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 14/32 in price to yield 2.56 percent.
(Reporting by Ryan Vlastelica, Wanfeng Zhou and Emily Flitter
in New York; Brian Gorman, Joe Brock, Jan Harvey in London;
Writing by Herbert Lash; Editing by Jan Pachal)
