GLOBAL MARKETS-Gold tumbles; shares flat on fiscal cliff tension

Thu Dec 20, 2012 2:09pm EST

* Gold drops to near 4-month low on year-end selling
    * Wall Street flat amid stalemate in fiscal talks
    * IntercontinentalExchange buys NYSE Euronext for $8 billion
    * Euro drifts lower vs dollar


    By Angela Moon
    NEW YORK, Dec 20 (Reuters) - Gold prices tumbled to an
almost four-month low on Thursday on a burst of year-end
selling, while global shares were little changed as the lack of
progress in talks to avert the U.S. "fiscal cliff" kept buyers
on hold. 
    In the currency market, the euro edged lower against the
dollar in volatile trading as the worries over the budget
negotiations in Washington outweighed generally positive U.S.
economic data that earlier investors' appetite for risk.
    Republicans in the House of Representatives pushed ahead
with their own budget plan on Thursday, one that President
Barack Obama has said he would veto. 
    Gold prices fell more than 1 percent, after breaking through
its 200-day moving average, which is considered a critical
support level.
    Spot gold was down 1.08 percent at $1,648.59 an ounce
at 1517 GMT, after hitting a low of $1,646.94.
    U.S. gold futures for December delivery were down
0.98 percent to $1,651.40.
    Prices were on track for their biggest quarterly drop since
the third quarter of 2008, with the announcement of a fresh
round of usually bullion-friendly U.S. monetary easing last
month resulting in only temporary gains.
    "There has been liquidation ahead of year-end. People have
been taking money out of gold and investing in other assets,"
said Simon Weeks, head of precious metals at Scotia Mocatta.
    In the absence of news, said Anne-Laure Tremblay, a BNP
Paribas analyst, there seemed to be little appetite for a
sustained move higher due to expectations that a deal would
still be reached in the U.S. budget talks. 
   "This should be mildly positive for risk appetite," she said.
    
    FISCAL CLIFF TENSIONS
    On Wall Street, prices were little changed on worries that a
budget deal would not come as soon as they had hoped.
 
    Republicans and the White House continued to parry over
their competing budget plans, though both sides indicated they
wanted to reach an agreement. U.S. House of Representatives
Speaker John Boehner  said he would keeping working with the
president to try to reach an agreement. 
    The absence of a significant sell-off shows "the market
still believes that there will be an announcement of some sort.
But as the clock is ticking, the most you're going to get is a
stop-gap measure," said Quincy Krosby, market strategist at
Prudential Financial in Newark, New Jersey.
    "At least in the posturing it looks as if there are
ultimatums put on the table, which tends to box either side in,"
he added.
    MSCI's world equity index has risen steadily
over the past five weeks on optimism that a budget deal would
clear the way for stronger growth in 2013. It was steady near
342 points on Thursday, not far from levels last seen in July
2011.
    The Dow Jones industrial average was up 5.36 points,
or 0.04 percent, at 13,257.33. The Standard & Poor's 500 Index 
 was up 1.62 points, or 0.11 percent, at 1,437.43. The
Nasdaq Composite Index  was down 3.35 points, or 0.11
percent, at 3,041.01.
    The market barely reacted to a string of strong economic
data.
    The U.S. Commerce Department said the economy grew faster in
the third quarter than it had previously estimated, and an
industry group reported that sales of existing homes surged to a
three-year high in November.
    NYSE Euronext surged more than 30 percent and was
the S&P 500's top percentage gainer after
IntercontinentalExchange Inc said it would buy the
operator of the New York Stock Exchange for $8.2 billion.
    NYSE was up 33 percent at $31.96, while ICE shares gave up
early gains to fall 1.1 percent to $126.84. 
    In Europe, shares stuttered as indexes approached levels
considered overbought. The FTSEurofirst 300 closed
virtually unchanged at 1,142.80 points. The 14-day relative
strength index, a widely-used technical momentum indicator,
stood at 67.5, close to the 70 and above level that is
considered "overbought."
    The euro was down slightly at $1.3224 after trading
higher for most of the session. On Wednesday, the euro hit an
8-1/2-month high. Still, market players were mostly positioned
for a U.S. deal to be reached on time, with some expecting the
euro to go as high as $1.3500 by early January. 
    The dollar was flat against the yen at 84.36 yen. The
Japanese currency had earlier slipped against the dollar after
the scale of asset purchases set by the Bank of Japan
disappointed some investors who had positioned for more
aggressive easing.  
    U.S. Treasuries prices rose as investors stuck to safe-haven
government bonds. The benchmark 10-year U.S. Treasury note
 was up 6/32, with the yield at 1.784 percent.
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