(Updates to U.S. markets; changes byline, dateline previously
* Gold hits 6-week bottom on worry over U.S. rate hike
* New Zealand dollar rises to 2-1/2-year high
* Citigroup shares post biggest daily drop since Nov. 2012
* Euro at 3-week low on fear of ECB easing
By Barani Krishnan
NEW YORK, March 27 U.S. stocks were little
changed on Thursday after the government's upward revision to
fourth-quarter growth was not enough to inspire investors and as
worries over Ukraine lingered, while gold tumbled to a six-week
low on bets that U.S. interest rates might rise sooner than
The euro hit a three-week low against the dollar on
speculation the European Central Bank might ease monetary policy
further. Peripheral European government bond yields hit a
In U.S. Treasuries, yields on intermediate-dated notes edged
higher, and the yield curve resumed a recent flattening trend,
as investors prepared for $29 billion of new seven-year notes.
It was the final sale of new $96 billion coupon-bearing supply
The U.S. Commerce Department said gross domestic product
expanded at a 2.6 percent annual pace in the fourth quarter,
revised up from its prior estimate of 2.4 percent but below the
2.7 percent pace expected by analysts.
"We need surprisingly good news to jar the market out of its
trading range, and today's data, while respectable, isn't that,"
said Mark Luschini, chief investment strategist at Janney
Montgomery Scott in Philadelphia.
However, an unexpected drop in weekly jobless claims to a
near four-month low supported the theory that economic weakness
earlier in the year was due to a brutal winter rather than
A steep decline in shares of Citigroup Inc pressured
the market. Citi's shares suffered their biggest daily drop
since November 2012 after the Federal Reserve on Wednesday
rejected the bank's to return capital to shareholders.
Investors also remained concerned over the prolonged
conflict between the West and Russia over Ukraine. The United
States and the European Union on Wednesday agreed to prepare
possibly tougher economic sanctions in response to Russia's
annexation of Ukraine's Crimea territory.
Gold's spot price broke below the $1,300 an ounce
psychological support on price charts as traders watched for
clues on U.S. rate hikes. While Federal Reserve Chair Janet
Yellen said last week that rates could start rising by early
next year, the gold market is already reacting to the
opportunity cost of holding non-yielding bullion.
The Dow Jones industrial average was up 21.77 points,
or 0.13 percent, at 16,290.76. The Standard & Poor's 500 Index
was down 0.11 points, or 0.01 percent, at 1,852.45. The
Nasdaq Composite Index was down 9.98 points, or 0.24
percent, at 4,163.60.
Citigroup slumped 5.2 percent to $47.52 a day after the Fed
rejected the bank's plan to buy back $6.4 billion of shares and
boost dividends, saying the bank wasn't sufficiently prepared to
handle a potential financial crisis.
Shares of Zions Bancorp, whose capital plan was
also rejected by the Fed, fell 0.8 percent to $29.40.
In U.S. Treasuries, lighter demand was expected for the $29
billion auction of seven-year notes, compared to Wednesday's
strong sale for the $35-billion five-year notes.
The benchmark 10-year U.S. Treasury note was down 1/32, with
the yield at 2.7045 percent.
In global equities, the MSCI world equity index
edged up 0.07 percent while the pan-European
FTSEurofirst 200 index was up 0.14 percent.
The dollar edged higher against the euro and the yen after
the U.S. economic data, while the New Zealand dollar hovered
near a 2-1/2-year high after economic data and hints that the
country's central bank could raise interest rates.
The U.S. data put the Federal Reserve "squarely on pace" to
continue cutting its monthly asset purchases and raise
short-term interest rates in the first half of 2015, said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange in
Investors had bought the dollar last week after Fed Chair
Janet Yellen suggested the possibility of raising interest rates
early next year, or about six months after its current
bond-buying program ends.
In Europe, the focus was on whether the euro zone's central
bank might act to bolster a slow economic recovery.
The New Zealand dollar rose to a 2-1/2 year
against the U.S. dollar after economic data and hints that the
country's central bank could raise interest rates. The New
Zealand current hit a high of $0.8680, up 0.9 percent
on the day.
Emerging market stocks were steady while Ukraine's sovereign
government bonds rose after the International Monetary Fund said
it had agreed a $14-18 billion bailout for the country.
Spanish 10-year yields hit an eight-year low of
3.271 percent and Italian yields an 8-1/2-year low
of 3.327 percent, while Portuguese yields shrank
fell to a four-year low of 4.091 percent.
All of these countries were at the leading edge of the euro
zone debt crisis before the region's fortunes began to improve.
Italy's 10-year government bonds are the best performing asset
so far this year after gold and commodities. (link.reuters.com/pat75v)
(Additional reporting by Natsuko Waki and Marius Zaharia;
Editing by Leslie Adler)