* U.S. Treasuries gain as inflation steady, bunds rally
* U.S. dollar skids but uptrend seen intact
* Oil falls below $107 as supply outlook improves
By Angela Moon
NEW YORK, Jan 16 The dollar fell against the
euro and the yen on Thursday, giving up early gains, while
Treasury prices climbed after U.S. data showed inflation
Wall Street opened lower, with the S&P 500 retreating from
its most recent all-time high as investors grappled with the
latest batch of corporate earnings and economic data.
After a lackluster start to the new year on concerns stock
valuations may be over-extended, the S&P 500 rallied 1.6
percent in the past two sessions to set its first record high
since Dec. 31.
The Dow Jones industrial average was down 97.67
points, or 0.59 percent, at 16,384.27. The Standard & Poor's 500
Index was down 6.57 points, or 0.36 percent, at 1,841.81.
The Nasdaq Composite Index was down 7.08 points, or 0.17
percent, at 4,207.80.
"We've made a nice run and the market is entitled to
consolidate and use sort of a 'wait-and-see' attitude as far as
earnings are concerned," said Terry Morris, senior equity
manager for National Penn Investors Trust Company in Reading,
Among the major companies that reported on Thursday,
Citigroup Inc fell 2.7 percent to $53.46 after its
results, while Goldman Sachs edged down slightly.
Treasuries prices gained after U.S. inflation data came in
as expected and amid strength in German government debt.
U.S. consumer prices rose by the most in six months in
December but were in line with expectations, after producer
price data on Wednesday surprised some investors by rising more
An unexpected drop in Australian employment boosted demand
for Treasuries overnight. while German bunds also rallied.
"CPI come in at consensus... the market is being dragged up
because of the strength in bunds," said Thomas di Galoma,
co-head of fixed-income rates at ED&F Man Capital in New York.
Treasuries extended their gains after the Philadelphia Fed's
index of business conditions in the U.S. Mid-Atlantic region
fell to its lowest level since April.
Other data showed the number of Americans filing new claims
for unemployment benefits fell for a second week last week,
suggesting a sharp December step-down in job growth was likely
to be temporary.
Benchmark 10-year Treasuries were last up 9/32
in price to yield 2.8488 percent.
The dollar fell to 104.28 against the yen, erasing a
rebound that came after the greenback was battered by the
surprisingly weak December U.S. non-farm payroll report at the
end of last week. On Monday, the dollar fell to a four-week low
of 102.85 against the yen.
The Australian dollar, meanwhile, tumbled against the U.S.
unit to its lowest since August 2010 after a surprise fall in
Australian employment raised the possibility of another cut in
interest rates from the Reserve Bank of Australia.
In Europe, equities steadied just below a 5-1/2-year high,
with mining shares boosted by output data and broker comments
offsetting losses in retail and technology stocks.
The STOXX Europe 600 basic resources index rose 2.4
percent to the top of the sectoral gainers' list. A sharp rise
in output helped Rio Tinto rise 3.4 percent and research
notes helped BHP Billiton and Polymetal
advance 3.8 percent and 5.8 percent.
The MSCI world index, which strips out the recently weak
emerging markets, fell 0.2 percent..
In commodities markets, Brent crude oil fell below
$107 a barrel as expectations of more supply from the Middle
East and North Africa outweighed news of a large drop in U.S.
Huge volumes of crude from Iran and Libya have been blocked
by political and civil disputes, but both countries may soon be
able to send more into markets that are already well supplied.