* Wall Street slides as weak data dims economic outlook
* Dollar drops vs yen after weak U.S. durable goods report
* Bonds gain after strong auction of 5-year notes
* Oil drops below $77 a barrel on higher crude inventory
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, July 28 (Reuters) - World stocks fell, snapping
a four-day rally on Wednesday, as weak orders for U.S. durable
goods in June and the Federal Reserve's downbeat take on the
economy dampened the outlook and drove the dollar lower.
New orders for long-lasting U.S. manufactured goods fell
unexpectedly for a second straight month, marking their
largest decline since August, in a fresh sign the economy had
slowed in the second quarter. But some analysts said the
report was respectable after stripping out certain categories.
For details see; []
The Fed's Beige Book report, a summary of U.S. economic
conditions, indicated activity was not as robust in a few
districts and had lost steam over the past several weeks.
[]
A rally built on strong earnings lifted the broad Standard
& Poor's 500 index on Monday to close above its 200-day moving
average, a closely watched measure of market direction.
But the Fed's assessment of the economy and weak data
weighed on sentiment.
"Earnings have been good, but the overall economy is still
sluggish at best and is not coming back as much as we would
have hoped," said Ryan Detrick, senior technical strategist at
Schaeffer's Investment Research in Cincinnati.
MSCI's all-country world index <.MIWD00000PUS> dipped 0.12
percent, and the Thomson Reuters global stock index
<.TRXFLDGLPU> was slightly lower.
DESPITE PULLBACK, DOW STILL UP FOR YEAR
The Dow Jones industrial average <> fell 39.81 points,
or 0.38 percent, to end at 10,497.88. The Standard & Poor's
500 Index <.SPX> fell 7.71 points, or 0.69 percent, to finish
at 1,106.13. The Nasdaq Composite Index <> slipped 23.69
points, or 1.04 percent, to close at 2,264.56.
Even with Wednesday's decline, the Dow was still in
positive territory for the year, while the S&P 500 and the
Nasdaq were slightly lower for 2010 so far.
With the S&P's 200-day moving average at about 1,114,
traders are trying to determine where it has peaked or
represents a consolidation point before further gains.
U.S. corporate results continued to surprise on the
upside.
Defense contractor General Dynamics Corp <GD.N> and
ConocoPhillips <COP.N>, the third-largest U.S. oil company,
both posted stronger-than-expected quarterly profits.
After almost half of the S&P 500 having reported earnings,
77 percent of companies have beat expectations, according to
Thomson Reuters Proprietary Research.
The dollar fell against the yen and eased against the euro
as the weaker-than-expected reading of U.S. durable goods
orders added to fears about the economy. []
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.07 percent at
82.126.
The euro <EUR=> was up 0.02 percent at $1.2996.
Against the yen, the dollar <JPY=> was down 0.50 percent
at 87.44.
Sterling hit a five-month high against the dollar at
$1.5630 as earlier comments from the Bank of England did
little to quell optimism about the UK economic outlook.
[]
BONDS RISE AFTER AUCTION AND DATA
The Commerce Department said U.S. durable goods orders
fell 1.0 percent in June after a revised 0.8 percent drop in
May. Analysts forecast an increase of 1.0 percent.
But Michael Woolfolk, senior currency strategist at
BNY Mellon in New York, said the durable goods report is
always difficult to digest. The number was negative because of
commercial aircraft orders, he said.
"If you strip out aircraft and defense, you're left with a
respectable rise of 0.6 percent" in the important capital
goods category, he said.
Those orders were up 15.2 percent on a year-on-year
basis.
"That's consistent with a strong recovery in industrial
production and durable goods orders. So these numbers are not
very concerning," Woolfolk said.
Treasuries rose following a strongly bid auction of $37
billion in five-year notes, which sold at yields that were
lower than the same notes trading at the time in the open
market. []
"The market just sort of took today's data and said, 'You
know what? There's still a huge demand for Treasuries; the
economy's not as strong as we want it, I think we'll go ahead
and buy these things,'" said Todd Colvin, vice president at MF
Global in Chicago.
The benchmark 10-year U.S. Treasury note <US10YT=RR>
gained 13/32 in price to yield 3.00 percent after trading flat
at midday.
OIL DROPS, COPPER CLIMBS
Oil prices fell a second straight day on a surprise crude
oil inventory build and weak economic data. []
The U.S. Energy Information Administration inventory
report showed crude stocks rose 7.31 million barrels last week
as imports jumped. [] A Reuters analyst survey had
forecast crude oil stocks would be down 1.6 million barrels.
"The crude data looks decidedly bearish," said Jim
Ritterbusch, president at Ritterbusch & Associates in Galena,
Illinois.
U.S. crude for September delivery <CLc1> fell 51 cents, or
0.66 percent, to settle at $76.99 a barrel.
ICE Brent <LCOc1> slipped 7 cents to settle at $76.06 a
barrel.
Copper rose to its highest point since early May after
assurances on economic growth from top metals consumer China
and improving fundamentals. []
U.S. gold futures for August delivery climbed $2.40 to
settle at $1,160.40 an ounce. []
Earlier, Japan's Nikkei <> climbed 2.7 percent for
its highest close and biggest one-day gain in two weeks.
MSCI's index for Asian stocks less Japan <.MIAPJ0000PUS>
trimmed gains to trade flat.
(Reporting by Matthew Lynley, Nick Olivari and Emily Flitter
in New York; Christopher Johnson in London; Blaise Robinson in
Paris; Writing by Herbert Lash; Editing by Jan Paschal)
