* Shares fall worldwide on worries of stimulus cutback
* Dollar recoups losses, trades flat vs euro after U.S. data
* Oil sets biggest weekly drop since mid-April
By Herbert Lash
NEW YORK, May 24 Global equity markets slipped
on Friday over worries the U.S. Federal Reserve may curb a
stimulus program that has lifted stocks, while the dollar
recovered against the euro after better-than-expected U.S.
durable goods data for April.
Wall Street pared earlier losses to end near break-even,
with the Dow edging into positive territory at the close,
reflecting a willingness to keep the equity rally alive.
"This has been happening all week. Investors are taking
advantage of down days to put more cash to work, especially when
the decline is not based on something fundamental," said Tim
Ghriskey, chief investment officer of Solaris Asset Mangement in
Bedford Hills, New York.
U.S. and European shares marked their first weekly decline
in five weeks after testimony by Fed Chairman Ben Bernanke
earlier in the week sparked speculation the U.S. central bank
will soon trim its support for the economy.
The Fed's purchase of Treasuries and mortgage-backed
securities, being conducted at a monthly pace of $85 billion,
has been a boon to equities markets and other riskier assets.
Bernanke's congressional testimony on Wednesday and the
release that day of minutes from the latest Fed policy-setting
meeting produced a shift that "reintroduced a sense of caution
that has long been absent" in markets, said Peter Kenny, chief
market strategist at Knight Capital in Jersey City, New Jersey.
The Fed minutes showed that some policymakers were willing
to consider scaling back on bond purchases as early as the Fed's
"Now the market has heard Bernanke and seen the minutes and
we're seeing some better data, the market is going to start to
decide where they think the Fed is going, sooner than later,"
said Jason Rogan, managing director of Treasuries trading at
Guggenheim Partners in New York.
MSCI's all-country world equity index fell
0.06 percent, while Europe's broad FTSE Eurofirst 300 index
of leading shares closed down 0.27 percent to 1,226.58.
On Wall Street, the Dow Jones industrial average was
up 8.60 points, or 0.06 percent, at 15,303.10. The Standard &
Poor's 500 Index was down 0.91 point, or 0.06 percent, at
1,649.60. The Nasdaq Composite Index was down 0.27
point, or 0.01 percent, at 3,459.14.
Gold prices initially rose, but then reversed course to
trade lower. Spot gold prices fell $6.99 an ounce to
$1,383.70. COMEX June gold futures closed at $1,386.6 per
ounce, down $5.20.
Orders for long-lasting U.S. manufactured goods rose more
than expected in April, a hopeful sign that a sharp slowdown in
factory output could soon run its course.
New orders for durable goods increased 3.3 percent last
month, the U.S. Commerce Department said, and it revised prior
readings for orders to show a smaller decline in March than
The dollar extended its declines against the yen in
afternoon trade and was on track for its biggest weekly loss in
three years against the Japanese currency.
The euro was last at $1.2928, down about 0.05 percent
against the dollar. Against the yen, the dollar was last
0.94 percent lower, at 101.07 yen.
Earlier, the euro had risen against the dollar after the
monthly German Ifo survey showed that business morale improved
more than expected in May. The data suggested that Germany,
Europe's biggest economy, is picking up, making further euro
zone monetary easing less likely.
Oil prices rebounded in late afternoon trading in New York
after a report of a gasoline unit shutdown at a refinery and as
traders bought contracts to cover short positions ahead of a
long holiday weekend in the United States.
Genscape said it detected the shutdown of the 70,000 barrel
per day fluid catalytic cracker at Irving Oil's 300,000 bpd
refinery in St. John's, Canada.
Brent rose 20 cents to settle at $102.64 a barrel.
U.S. crude fell 10 cents to settle at $94.15 a barrel.
U.S. Treasuries prices edged up as traders evaluated the
likelihood of the Fed pulling back on bond purchases and whether
the recent selloff was overdone.
The benchmark 10-year U.S. Treasury note was up
1/32 in price to yield 2.0107 percent.