NEW YORK Stocks edged down on Monday and the dollar fell as the U.S. economic outlook remained mired in gloom and a surprise loss at Wachovia Corp, America's fourth-largest bank, stoked fears that the global credit crisis is not over.
Oil prices jumped on an unexpected rise in U.S. gasoline sales last month. Gold bounced, then gave up gains in reaction to an earlier drop in the dollar and the rise in crude oil prices.
Stocks fell in Europe and New York as the Wachovia loss and disappointing earnings at the Netherlands' Philips Electronics kept investors cautious about equities.
Economic data on both sides of the Atlantic did little to brighten the sour mood in the markets or ease apprehension about the outlook for the U.S. and British economies.
U.S. retail sales rose an unexpected 2 percent in March, spurred by record high gasoline costs. Excluding gasoline, retail sales were flat, the U.S. Commerce Department reported.
British manufacturers raised prices in March at the fastest rate since 1991 after the highest increase in costs since records began being kept more than two decades ago, raising the risk of a sharp consumer price spike.
The weak results from Wachovia Corp WB.N -- the No. 4 U.S. bank -- and European newspaper reports of further write-downs at Credit Suisse revived worries about the extent of the global credit crisis.
Wachovia reported an upsurge in credit problems stemming from mortgages and other debt, triggering a fresh wave of fixed-income buying among investors already rattled by General Electric Co's (GE.N) disappointing results on Friday.
"This is just one more in a growing list of financial services companies that are struggling to keep the ship upright," said Kevin Giddis, managing director of fixed-income trading at Morgan Keegan in Memphis, Tennessee.
Shares in Wachovia fell 9 percent, and the Standard & Poor's financial sector index .GSPF closed down about 2.4 percent, according to preliminary figures.
"I don't think anyone's shocked Wachovia is having to grapple with this," said Peter Kenny, managing director at the Knight Equity Markets brokerage in Jersey City, New Jersey. "GE was a bigger drag (on the market) because it speaks to a much larger, global footprint."
Trading on Wall Street was choppy. The Dow Jones industrial average .DJI ended down 16.93 points, or 0.14 percent, at 12,308.49. The Standard & Poor's 500 Index .SPX closed down 3.94 points, or 0.30 percent, at 1,328.89. The Nasdaq Composite Index .IXIC finished down 14.42 points, or 0.63 percent, at 2,275.82.
European stocks fell for the fifth session in a row, led by Credit Suisse CSGN.VX after newspaper reports of further write-downs at the Swiss bank and on Philips Electronics' (PHG.AS) disappointing first-quarter earnings.
The FTSEurofirst 300 .FTEU3 index of leading European shares closed 0.76 percent lower at 1,275 points. The index is down about 15 percent for the year.
Credit Suisse shares lost 3.3 percent after weekend news reports said it could announce further write-downs of up to 5 billion Swiss francs ($5 billion) when it posts first-quarter results later this month. The bank declined to comment on the reports.
Shares in Philips, whose core profit fell 28 percent, dropped 3.3 percent to their lowest close since mid-July 2006.
The benchmark 10-year U.S. Treasury note was down 10/32 in price, with the yield at 3.5128 percent. The 2-year U.S. Treasury note was down 1/32, with the yield at 1.7621 percent. The 30-year U.S. Treasury bond was down 25/32, with the yield at 4.3493 percent.
Euro zone government bond prices edged lower. Traders said investors appeared to be holding cash rather than adding to bond portfolios as European bourses and Wall Street endured selling.
Asian shares, reacting for the first time to last week's news, lurched lower as the nasty earnings surprise from GE and a 26-year low in U.S. consumer sentiment reported on Friday outweighed the Group of Seven nation's support for the dollar in a weekend meeting.
Japan's Nikkei average index .N225 fell 3.1 percent while shares across the rest of Asia, measured by MSCI's index slid 2.3 percent.
The dollar was little changed as the New York close approached, surrendering earlier gains.
"The dollar remains under pressure with an overnight decline in equities reflecting heightened risk aversion," said Michael Woolfolk, senior currency strategist, at Bank of New York Mellon.
The dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index .DXY down 0.1 percent at 71.808 from a previous session close of 72.277. The euro rose 0.1 percent to 1.5816.
Oil prices jumped on an unexpected rise in U.S. gasoline sales in March, which also pushed the country's overall retail sales higher for the month. A brief U.S. pipeline shutdown and some production losses in Nigeria also helped bolster crude prices.
U.S. light sweet crude oil rose $1.72, or 1.56 percent, to $111.86 per barrel.
Gold buying gathered pace after the dollar turned negative against the euro and oil prices jumped but failed to maintain gains.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Spot gold prices fell $1.80, or 0.19 percent, to
(Reporting by Herbert Lash, Nick Olivari, Richard Leong, Peter Starck, and Gertrude Chavez-Dreyfuss in New York and Ikuko Kao and Alastair Sharp in London; Editing by Jonathan Oatis)