By Angela Moon
NEW YORK Jan 13 A measure of world stock
markets reversed early gains to trade slightly lower on Monday,
weighed by a decline in U.S. stocks, while the dollar and bond
yields fell as last week's surprisingly weak U.S. jobs data
strengthened the case for the Federal Reserve to keep interest
rates low for longer.
U.S. Treasuries prices edged up, after the benchmark 10-year
note yield registered its largest one-day fall since October on
Friday. The dollar dropped to its lowest level in four weeks
against the yen.
Wall Street kicked off a week full of corporate earnings
reports on a cautious note on growing concerns that stocks may
have become expensive, with the benchmark S&P 500 at its highest
level in nearly seven years. The index surged almost 30 percent
"People are sitting on their hands, waiting for major
results to figure out how strong this season may be," said
Douglas DePietro, managing director at Evercore Partners in New
Investors will keep an eye on fourth-quarter earnings, with
major U.S. banks, including JPMorgan, Citigroup
and Goldman Sachs, announcing results this week. European
earnings will gather pace in the last week of the month.
According to Thomson Reuters data, fourth-quarter profits
are expected to grow 7.3 percent over the year-ago period.
However, the 9.8 ratio of negative guidance to positive outlooks
is currently the largest on record.
U.S. stocks fell in early afternoon trading. The Dow Jones
industrial average was down 116.53 points, or 0.71
percent, at 16,320.52. The Standard & Poor's 500 Index
was down 13.97 points, or 0.76 percent, at 1,828.40. The Nasdaq
Composite Index was down 28.27 points, or 0.68 percent,
U.S. equity gains have largely come on accommodative
monetary policies by the Federal Reserve.
Friday's data showed the U.S. economy posted the weakest
monthly job growth in three years in December. This triggered a
slide in U.S. Treasury yields.
The report did not change expectations that the Fed would
wind down its bond-buying program by the end of the year, but
interest rate futures markets pushed back the timing of the
first rate hike toward late 2015 from mid-2015 .
Equities in emerging markets rallied as investment funds
moved back to riskier assets.
In Europe, banking shares rallied after regulators agreed to
soften new leverage ratios for banks. The STOXX bank index
rose 1.5 percent, extending its gains this year to
almost 6 percent.
"The fact that the ratios have been eased means that some of
the forecasts for bank profitability in 2014 can probably be
revised up slightly and people are just feeling slightly more
optimistic about the sector," said Matt Basi, head of sales
trading at CMC Markets.
MSCI's world equity index was down 0.1
percent while emerging stocks were up 0.6 percent.
The FTSEurofirst 300 index of top European shares
rose 0.3 percent to 1,324.42, while the euro zone's blue-chip
Euro STOXX 50 index was up 0.3 percent at 3,111.94,
both just a few points below five-year highs hit recently.
Benchmark 10-year euro zone bond yields were
slightly lower on the day while Bund futures prices
rose 19 ticks. Italian bond yields fell to 3.9
percent, near an eight-month low hit last week.
The benchmark 10-year U.S. Treasury note was up
9/32, its yield at 2.8266 percent.
The dollar dropped to its lowest level in four weeks against
the yen. The dollar slid nearly 1 percent against the yen to
103.13 yen, after earlier falling to 102.97, its lowest
level since Dec. 18.
The greenback was flat against a basket of six major
In commodity markets, Brent oil fell slightly below $107 a
barrel as the market absorbed news of a deal between Western
nations and Iran to curb its nuclear program and the resumption
of production from a key North Sea oilfield.
U.S. oil fell more than $1, then pared some losses, though
it was pressured by poor the U.S. jobs data that suggested an
economic recovery in the world's largest oil consumer may be
Brent crude for February delivery was off 33 cents
to $106.92 per barrel while U.S. crude fell 87 cents to
$91.85 per barrel.