* U.S. stocks end up slightly in volatile session
* Brent crude oil falls on hopes for end to Libya conflict
* Gold sets record high again near $1,900 an ounce
(Updates with U.S. market closes)
By Caroline Valetkevitch
NEW YORK, Aug 22 U.S. stocks struggled to end
barely higher on Monday after four weeks of losses, while Brent
crude prices slipped on prospects Libya's civil war will soon
end and restore oil exports from the north African country.
Traditional safe-haven gold hit a third consecutive
all-time high near $1,900 after staging its biggest weekly gain
in 2-1/2 years last week.
Sharp volatility in stocks, which has marked trading in
recent weeks, underscored investor nervousness.
The turmoil largely reflects persistent worries that the
United States may fall back into recession, as well as the
threat that sovereign debt problems in euro zone peripheral
countries could spread to the larger economies.
Shares of financial companies, seen as most vulnerable to
the debt crisis in Europe, underperformed other sectors.
JPMorgan Chase (JPM.N) fell 2.7 percent to $33.41 and was the
top drag on the Dow, followed by Bank of America (BAC.N), down
7.9 percent at $6.42.
The cost for euro zone banks to borrow money from one
another rose again, heading back toward their highest levels
since late 2008 as U.S. banks remained wary of lending to
European counterparts in the face of the intractable debt
crisis. For details, see [ID:nL5E7JM1B5]
"The ground zero of all worries is financials," said
Charlie Smith, chief investment officer at Pittsburgh-based
Fort Pitt Capital Group.
Speculation is widespread in financial markets that Federal
Reserve Chairman Ben Bernanke will use his Friday speech at a
central banker conference in Jackson Hole, Wyoming, to signal a
new monetary offensive to support the faltering U.S. economy.
That helped support stocks and gold but weigh on U.S. bond
Bernanke, however, is most likely to outline gradualist
measures, which would disappoint those looking for a big-bang
approach such as a fresh round of bond buying, known as QE3.
The Fed chairman looks set to discuss ways the central bank
could tweak the Fed's balance sheet as a means to put further
pressure on medium and long-term interest rates and anchor them
at low levels. These could be implemented in September and
October at coming Fed meetings.
"The Fed is definitely on people's minds, and you could
argue that some of the bounce seen in high-yield commodity
currencies is at least in part related to hopes for more policy
measures," said Wells Fargo strategist Vassili Serebriakov in
On Wall Street, the Dow Jones industrial average .DJI
gained 37.00 points, or 0.34 percent, at 10,854.65. The
Standard & Poor's 500 Index .SPX was up 0.29 point, or 0.03
percent, at 1,123.82. The Nasdaq Composite Index .IXIC added
3.54 points, or 0.15 percent, at 2,345.38.
The S&P, which on Friday posted a fourth week of losses, is
down 16.4 percent since July 22, roughly when the recent
For the day, shares of large-cap technology companies
outperformed most other shares, with IBM (IBM.N) leading gains
on the Dow. IBM was up 0.9 percent at $158.98. Shares of
Hewlett-Packard (HPQ.N) rose 3.6 percent to $24.45 after its
sharp losses last week.
The FTSEurofirst 300 .FTEU3 index of top European shares
rose 0.8 percent to close at 916.78.
The MSCI world equity index .MIWD00000PUS ended down 0.1
percent after fluctuating between negative and positive
territory for much of the day. The index has fallen for five
weeks in a row and appears headed for its worst monthly
performance since October 2008, when markets were reeling after
the collapse of Lehman Brothers.
In the oil market, Brent crude LCOc1 settled at $108.36,
down 26 cents on the Libya news For more, see: [ID:nL5E7JL0LD].
But U.S. crude oil CLc1 settled higher on the New York
Mercantile Exchange. Crude for September delivery expired and
settled at $84.12 a barrel, up $1.86, or 2.26 percent.
The Fed speculation also put some early pressure on the
dollar against some commodity-linked currencies. The Australian
dollar AUD=D4 was last up 0.2 percent at $1.0414. The New
Zealand dollar NZD=D4 rose 1 percent to $0.8241 while the
greenback slipped 0.1 percent to 0.9894 Canadian dollar
The benchmark 10-year note US10YT=RR fell 10/32 in price,
yielding 2.10 percent versus Friday's close of 2.06 percent.
One of this year's best-performing assets, spot gold XAU=
was up 1.6 percent at $1,889.29 an ounce, building on its
strongest one-week rise since February 2009.
"Gold is driven by the expectation that at some point
inflation will come back, and a continuation of people looking
for a safe haven beside just the U.S. Treasury bonds," said Leo
Larkin, metals equity analyst at Standard & Poor's.
(Reporting by Caroline Valetkevitch, with additional reporting
by Ashley Lau, Frank Tang and Steven Johnson in New York;
Editing by Dan Grebler)