NEW YORK (Reuters) - Global stocks fell and bond prices rose on Thursday as lackluster U.S. and euro zone economic data rekindled worries over growth prospects in the developed world.
Gold rose to near $1,300 an ounce, ending higher for a fourth straight day, while the euro retreated from a five-month high against the dollar, hobbled by worries about Ireland’s economy and its troubled banking sector.
The Japanese yen, meanwhile, hit its lowest against the dollar since last week’s intervention.
U.S. stocks slumped late in the session, breaking through a key technical level that marked the high end of the summer’s trading range. Investors had hoped the level would hold despite low trading volume, which cast doubts about the recent rally’s stamina.
“Market technicians had been very positive on our breaking out of that range, so falling back under it added to the decline we saw and accelerated our losses,” said John Stoltzfus, senior market strategist at Ticonderoga Securities in New York.
The Dow Jones industrial average .DJI closed down 76.89 points, or 0.72 percent, at 10,662.42. The Standard & Poor's 500 Index .SPX slid 9.45 points, or 0.83 percent, at 1,124.83. The Nasdaq Composite Index .IXIC fell 7.47 points, or 0.32 percent, at 2,327.08.
Weakness looked to carry over to Asian equity markets. The December futures contract that trades in Chicago for the Nikkei 225 stock index slid 5 points to 9,405.
Initial claims for state unemployment benefits rose 12,000 to a worse-than-expected seasonally adjusted 465,000, the Labor Department said, breaking two straight weeks of declines.
Sales of previously owned homes increased 7.6 percent to an annual rate of 4.13 million units in August, a touch above expectations. But the pace was the second-lowest in 13 years.
U.S. Treasury debt prices rose, although a bout of corporate hedging kept price gains in check for much of the afternoon.
Treasury prices continued their upward march as yields headed lower, with the 10-year yield briefly touching a 3-week low. Traders continued to focus on the prospects for more quantitative easing by the Federal Reserve.
The rise in new jobless claims also helped fuel the rally, along with overnight reports showing a slower pace of growth in the euro zone’s services and manufacturing sectors.
“The market already thinks (Fed Chairman Ben) Bernanke and crew are going to restart their purchases of government securities in November with the economy as it is,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
The benchmark 10-year U.S. Treasury note was up 1/32 in price to yield 2.55 percent, after trading higher for much of the session.
Data showing Ireland’s economy shrank 1.2 percent in the second quarter slowed the euro’s upward momentum. A separate report showing euro zone growth slowed in September also took some shine off the euro, which traded down 0.6 percent at $1.3319.
The dollar rose against a basket of major currencies, with the U.S. Dollar Index .DXY up 0.30 percent at 80.072.
Against the yen, the dollar fell 0.21 percent at 84.34.
Oil prices rose as gasoline futures rallied on the partial shutdown of a ConocoPhillips’ refinery in Linden, New Jersey. Units at the Bayway refinery stopped for a month and a half to install a new crude unit, tightening supply in the New York Harbor hub.
U.S. crude for November delivery rose 47 cents, or 0.62 percent, to settle at $75.18 per barrel.
ICE Brent crude for November rose 16 cents to settle at $78.11 a barrel.
Gold benefited from the lackluster economic reports.
U.S. gold futures for December delivery settled up $4.20 at $1,296.30.
Silver hit a 2-1/2 year high at $21.23 an ounce, a hair below its highest since 1980, on strong investment buying.
Major markets in Asia were closed due to holidays in Japan, China, Hong Kong and South Korea.
Reporting by Ryan Vlastelic, Steven C. Johnson, Robert Gibbons, Emily Flitter and Frank Tang in New York; Writing by Herbert Lash; Editing by Dan Grebler
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