By Jonathan Oatis
NEW YORK, Jan 28 (Reuters) - Wall Street stocks rose on
Monday, escaping a slump in Asian and European shares on fears
about the global economy, and helped by a fall in oil prices
amid anticipation of another U.S. Federal Reserve interest rate
cut.
Expectations of a Fed rate cut on Wednesday -- which would
be the second in a little more than a week -- pushed the dollar
downward against most major currencies.
While declines on European stock markets drove investors
into safe-haven assets like bonds, generally driving prices
higher there, U.S. Treasury debt fell as investors took profits
after a six-month rally and U.S. stocks rose.
Gold prices rose to record highs on the weakness in the
dollar as well as a power shortage in South Africa, a major
supplier of the yellow metal.
U.S. stock indexes were up in a volatile session that began
with shares falling. The Dow Jones industrial average <>
was up 69.59 points, or 0.57 percent, at 12,276.76. The
Standard & Poor's 500 Index <.SPX> was up 10.77 points, or 0.81
percent, at 1,341.38 and the Nasdaq Composite Index <> was
up 8.71 points, or 0.37 percent, at 2,334.91.
But across the Atlantic, the pan-European FTSEurofirst 300
index <> plunged as much as 2.48 percent before ending
the day down 1.0 percent at an unofficial 1,317.15 points,
pressured by worries about the economy and fallout from the
Societe Generale <SOGN.PA> trading scandal. In Asia, the Nikkei
225 index <> finished down nearly 4 percent at 13,087.91.
The Fed -- which surprised investors last week with an
aggressive intermeeting rate cut of three-quarters of a
percentage point -- was expected to slash the benchmark federal
funds rate again at a two-day meeting beginning on Tuesday.
Most Wall Street observers expect the central bank to cut
the rate by half a percentage point, which would put the fed
funds rate at 3 percent.
"I would expect the (stock market) volatility to continue
going into the Fed meeting. The market wants to know how much
the Fed is behind it," said Marc Pado, U.S. market strategist
at Cantor Fitzgerald & Co. in San Francisco.
Shortly after U.S. stock markets opened, the government
reported sales of new single-family homes fell last month to
their lowest rate in 13 years, an unexpectedly large decline.
[]
Related crises in the U.S. housing market and the subprime
mortgage sector and its results -- a credit crunch and big
losses for big banks -- have been the biggest economic
worries.
While Fed cuts and a planned $150 billion economic stimulus
package are aimed at averting a recession or easing its blows,
the rate reductions reduce the appeal of the dollar for
investors looking for attractive yields.
The euro rose 0.8 percent to $1.4790 <EUR=>, rising for the
fourth session out of the last five. Against the Swiss franc,
the dollar was down 0.8 percent to 1.0885 francs <CHF=>.
The dollar was relatively unchanged at 106.76 yen <JPY=>.
On the U.S. Treasury bond market, the benchmark 10-year
note's price fell, driving the yield up to 3.58 percent
<US10YT=RR>, compared with 3.56 percent late on Friday. [
Oil futures earlier dropped more than a dollar to near $89
a barrel on profit-taking, but steadied in early afternoon
trading. U.S. crude <CLc1> was last down 13 cents to $90.58 a
barrel. In London, Brent crude <LCOc1> was down 26 cents at
$91.15 a barrel. [O/R]
In the precious metals markets, spot gold <XAU=> hit a
historic high of $929.20 per ounce before paring gains slightly
to stand at $927.50/928.40 an ounce against $913.00/914.00 on
Friday.
