GLOBAL MARKETS-Shares, dollar down ahead of earnings, bonds rise

Tue Jan 8, 2013 4:42pm EST

* U.S. stocks fall ahead of earnings, profits seen soft
    * Dollar falls vs yen after sharp, rapid rise
    * Euro zone data points to stabilization of weak economy
    * Brent oil edges higher; gold also rises


    By Ryan Vlastelica and Herbert Lash
    NEW YORK, Jan 8 (Reuters) - Global shares fell and bond
prices rose on Tuesday, with  investors cautious ahead of a U.S.
earnings season expected to show sluggish growth in quarterly
corporate profits.
    The dollar and euro fell against the yen as investors booked
profits in the aftermath of swift and significant gains, but
looser Bank of Japan monetary policy should limit the yen's
upside.
    The dollar was last down 0.75 percent at 87.11 yen,
well off a 2-1/2-year high hit last Friday. The euro 
fell 1.02 percent at 113.96 yen.
    U.S. corporate profits are expected to be higher than the
third quarter's lackluster results, but analysts' estimates are
down sharply from where they were in October. 
    Quarterly earnings are expected to grow 2.8 percent,
according to Thomson Reuters data. 
    Alcoa Inc reported a fourth-quarter profit of $242
million as cost cuts helped offset a drop in aluminum prices,
marking the unofficial start to the earnings season as the first
Dow component to release results.
    Alcoa shares rose 7 cents to $9.20 in after-hours trade
after closing 0.33 percent higher at $9.13 from Monday's close.
    Early reports have suggested some signs of improvement.
Monsanto Co reported strong first-quarter results and
raised its full-year outlook, sending its shares 2.67 percent
higher to close at $98.50. 
    Sears Holding Corp reported sales for the holiday
season that were not as weak as many had feared, but the stock
sank as the company's chief executive stepped down unexpectedly.
Shares fell 6.43 percent to $40.16. 
    If earnings growth appears to be "less bad" than expected,
that would fuel a near-term uptick in the market, according to
Eric Wiegand, senior portfolio manager at U.S. Bank Wealth
Management in New York. "There are still ample areas for
concern," he added, citing policy worries in Washington and
uneven economic growth.
    The Dow Jones industrial average closed down 55.44
points, or 0.41 percent, at 13,328.85. The Standard & Poor's 500
Index fell 4.74 points, or 0.32 percent, to 1,457.15. The
Nasdaq Composite Index slid 7.01 points, or 0.23
percent, at 3,091.81. 
    Global shares measured by MSCI's all-country world index
 fell 0.33 percent to 345.73.
    The FTSEurofirst 300 index of top European shares
closed down 0.1 percent at 1,160.20 as data showed the euro zone
economy may be stabilizing, though at a weak level.
    The euro slid 0.25 to 1.3082 against the dollar.
    Euro zone business confidence improved again in December,
but unemployment reached a record and households held back from
spending in the run-up to Christmas, suggesting a recovery from
recession will be slow. German industrial orders also fell more
than forecast due to a sharp drop in demand from abroad.
  
    "Things are bad. It is still consistent with recession, but
at least they have stopped deteriorating," said Deutsche Bank
economist Gilles Moec.
    
 
    
    Prices for U.S. Treasuries rose as higher yields proved
attractive and the first sale of coupon-bearing Treasury debt
for the year drew strong non-dealer bidding.
    The Treasury sold $32 billion of three-year notes 
on Tuesday at a high yield of 0.385 percent, just about where
the market had expected. 
    The high direct takedown in this and the previous three-year
auction could signal "a shift in investor bidding patterns at
auctions, where buyers bypass dealers and go straight to the
Treasury, while still able to clear the auction near the WI
(when-issued) levels," wrote Nomura analysts after the sale.
    The benchmark 10-year U.S. Treasury note was up
10/32 in price to yield 1.8656 percent.
    In commodity and metals markets, Brent crude oil 
rose 54 cents to settle at $111.94 per barrel, while U.S. light
crude settled down 4 cents at $93.15. 
    Brent's premium over the U.S. West Texas Intermediate
benchmark widened by more than 50 cents, with traders citing the
start of the annual reweighting of the S&P GSCI commodity index,
one of two leading indices for investors. 
    Copper rose 0.1 percent and gold rose $12.26
to $1,658.90 ahead of data on Thursday from China and the
monthly meeting of the European Central Bank.
    "The market is underpinned by expectations that a cyclical
rebounding out of China will be positive for industrial metals,
and there is more positive sentiment now in the market," said
Robin Bhar, analyst at Societe Generale.
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