(Updates stocks, dollar and bonds)
By Herbert Lash
NEW YORK, March 27 (Reuters) - U.S. stocks fell on
Thursday amid concerns that Oracle's sluggish 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 had 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 prices surged above $108 a barrel 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 that
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.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 21/32, with the yield at 3.54 percent, up from 3.46
percent on Wednesday.
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 the Standard & Poor's 500
Index and the second-heaviest weight on the Nasdaq with a
slide of 7 percent.
The Dow Jones industrial average <> slid 120.40
points, or 0.97 percent, to end at 12,302.46. The Standard &
Poor's 500 Index <.SPX> fell 15.37 points, or 1.15 percent, to
1,325.76. The Nasdaq Composite Index <> dropped 43.53
points, or 1.87 percent, to close at 2,280.83.
DOLLAR TOPS 100 YEN BRIEFLY
The dollar briefly rose above 100 yen shortly after the announcement of the results of the Fed's auction. It last
traded at 99.75 yen <JPY=>, up 0.8 percent from 98.97 yen late
on Wednesday in New York.
The euro <EUR=> fell 0.5 percent for the day to $1.5766, a
bit more than 1 cent below last week's record highs above
$1.59.
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
revenue missing Wall Street's 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, a level last seen on March 14.
Asian stocks fell as financial shares slipped on concerns
about bank earnings, but gains in commodities helped cushion
the fall.
Tokyo's Nikkei <> tumbled 102.05 points, or 0.8
percent, to close at 12,604.58. MSCI's index of other Asian
shares <.MSCIAPJ> fell 0.34 percent.
OIL AND GOLD JUMP
U.S. crude oil <CLc1> for May delivery settled at $107.58
a barrel, up $1.68 on the New York Mercantile Exchange,
boosting this week's gains to more than 6 percent. Earlier,
the NYMEX May contract traded as high as $108.22. 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.
Andrew Lynch, a portfolio manager at Schroders, said, "The
market is still very, very jittery, but I think it wants to
believe that the central banks can solve the problem."
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.
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), up 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 Jan Paschal)
