* U.S. lawmakers make late effort to avoid fiscal crisis
* MSCI all-world index dips; U.S. stocks down
* Yen hits 2-year low vs dollar before Japan stimulus
By Caroline Valetkevitch
NEW YORK, Dec 28 Global stocks edged lower along
with the euro on Friday as the White House and U.S. lawmakers
planned to make a late effort to avoid the U.S. "fiscal cliff."
Meanwhile, expectations that Japan will inject new stimulus
into its economy pushed the yen to a two-year low for a third
President Barack Obama and Democratic and Republican
lawmakers were scheduled to meet on Friday as the deadline looms
for reaching a budget deal to avert massive tax increases and
spending cuts that could drag the economy - and others around
the world with it - into recession.
Participants in the 3 p.m. session (2000 GMT) will attempt
to smooth over sharp differences over raising taxes on
higher-income Americans and spending cuts in politically
sensitive social welfare programs such as Medicare and Medicaid.
The MSCI all-world share index was down 0.2
percent, and the pan-European FTSEurofirst 300 was down
U.S. stocks were also lower. The Dow Jones industrial
average was down 63.20 points, or 0.48 percent, at
13,033.11. The Standard & Poor's 500 Index was down 6.26
points, or 0.44 percent, at 1,411.84. The Nasdaq Composite Index
was down 7.42 points, or 0.25 percent, at 2,978.49.
Allowing $600 billion of higher taxes and spending cuts to
start in January would prevent U.S. debt spilling beyond a $16.4
trillion agreed limit. However, analysts fear the measures could
wipe as much as 4 percent off the country's growth rate.
"The recent market movement is all about the lack of
resolution and clarity on the cliff and comes despite the fact
that most economic reports have been very favorable," said
Richard Weiss, a Mountain View, California-based senior money
manager at American Century Investments. "We have to believe,
once Congress comes to any resolution-whether it comes before
the New Year or after-the market will resume its upward trend,
as data indicates it should."
Among Wall Street's gains, Barnes & Noble Inc rose
8.2 percent to $15.55 after the company said Pearson
had agreed to make a strategic investment in its
Nook Media subsidiary. However, it said the Nook business will
not meet the bookseller's prior projection for fiscal year 2013.
EURO FALLS, YEN HITS LOW
The euro was down 0.2 percent on the day at $1.3210,
having slipped to a session low of $1.3164 when traders said it
broke below stop-loss sell orders around $1.3170.
An agreement on the U.S. budget would be viewed as positive
for riskier currencies such as the euro and Australian dollar,
while a deadlock or snags in the negotiations would be deemed
positive for the safe-haven and highly liquid dollar.
The yen's unabated slide since Shinzo Abe took the helm as
Japan's prime minister on Wednesday has taken the currency to
two-year lows for three straight days. Abe has vowed to press
for aggressive monetary stimulus to fight deflation.
The dollar was steady against the yen at 86.07 yen,
edging away from an earlier peak of 86.64 yen, its strongest
since August 2010, when it stopped just shy of reported options
barriers at 86.75 yen and 87.00 yen.
In the U.S. bond market, benchmark Treasuries yields dropped
to their lowest levels in two weeks as concerns that the economy
would be harmed by tax hikes and spending cuts and a fall in
consumer confidence spurred demand for safe-haven bonds.
Benchmark 10-year notes rose 7/32 in price, with
yields falling to 1.71 percent, down from 1.73 percent on
Thursday and from a two-month high of 1.85 percent a week and a
BRENT OIL EASES
Brent crude oil held below $111 per barrel, not far off its
highest this month.
Brent crude was down 18 cents to $110.62, on course
for a weekly gain of about 1.5 percent and a full-year increase
of about 3 percent, which would be the smallest in four years.
U.S. crude rose 17 cents to $91.04 and was set for
its first yearly loss in four years.
Despite the tensions over the U.S. budget talks, the mood in
financial markets has been improving in recent weeks. Data from
emerging economies has shown signs of a pick-up while analysts
are hopeful that Europe may also soon bottom out.
A Reuters poll showed economists think China's factory
activity probably expanded at its fastest pace in eight months