(Adds close of U.S. markets)
* Rising energy shares offset bearish mood in U.S. stocks
* Dollar tumbles on bearish consumer sentiment data
* Gold crosses $900 ounce for first time in three weeks
By Herbert Lash
NEW YORK, May 16 (Reuters) - U.S. stocks were little
changed on Friday as oil prices streaking toward $128 a barrel
lifted energy shares and offset investor worries about a slump
in U.S. consumer confidence to a 28-year low.
Gold, a traditional hedge against inflation, broke above a
key psychological level of $900 per ounce for the first time in
three weeks as crude oil surged to a record $127.82.
U.S. government debt prices turned lower in afternoon trade
as stocks erased a majority of their losses and Treasuries ran
into technical "perceived" resistance at 3.78 percent on
10-year yields and 3.03 percent on five-year yields.
The dollar fell as a plunge in U.S. consumer confidence
raised concerns about an economic contraction in second quarter
and trimmed the chances the Federal Reserve will raise interest
rates this year.
The Reuters/University of Michigan Surveys of Consumers
said its preliminary index of confidence fell in May to 59.5,
its lowest level since June 1980 -- the height of U.S.
stagflation.
Oil shot to a fresh peak as a bullish call from investment
bank Goldman Sachs, which said crude will average $141 a barrel
in the second half of this year due to paper-thin inventories,
drowned out an offer of more supply from OPEC kingpin Saudi
Arabia.
Shares of Exxon Mobil Corp <XOM.N> and Chevron <CVX.N> rose
more than 11.5 percent, supporting the Dow and the broad market
Standard & Poor's 500 Index. The rise in oil prices also helped
European stock markets close higher.
But even with the climb in oil shares, the blue chip Dow
industrials and the Nasdaq fell.
"I think energy prices continuing to move higher are taking
a little bit of a toll today. It's not an endless pit for the
market to absorb the steadily rising crude prices," said Owen
Fitzpatrick, head of the U.S. Equity Group at Deutsche Bank
Private Wealth Management.
The Dow Jones industrial average <> fell 5.86 points,
or 0.05 percent, at 12,986.80. The Standard & Poor's 500 Index
<.SPX> rose 1.78 points, or 0.13 percent, at 1,425.35. The
Nasdaq Composite Index <> fell 4.88 points, or 0.19
percent, at 2,528.85.
Financial shares, led by Citigroup <C.N>, Bank of America
<BAC.N> and Wells Fargo <WFC.N>, were the biggest sector drag
on the benchmark Standard & Poor's 500 Index. Citigroup shares
fell 2.6 percent, while Bank of America fell 1.5 percent, and
Wells Fargo shed 2.2 percent.
The S&P index of energy shares <.GSPE> jumped 2.5 percent,
while the S&P financial index <.GSPF> fell 1.4 percent.
EUROPEAN STOCKS BOOSTED BY ENERGY
European shares rose, fed by the rally in energy stocks,
although banks came under pressure and the weak reading in U.S.
consumer sentiment knocked the market back from session peaks.
The FTSEurofirst 300 <> index of top European shares
closed up 0.4 percent to 1,365.2 points, after earlier rising
by as much as 1.2 percent to a four-month high.
Shares of Total, BP and Royal Dutch Shell rose by 1.5
percent to 2.5 percent, making them the three largest positive
influences on the broader market.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.73 percent at 72.806.
The euro raced to a session peak of $1.5600, and was last
trading at $1.5589 <EUR=>, up almost 1 percent on the day. The
dollar tumbled to an intraday low of 103.54 yen <JPY=> and was
last quoted at 104.18 yen, down 0.5 percent.
A pause by the U.S. central bank after slashing its fed
funds rates target by 3.25 percentage points to 2 percent since
mid-September would support the dollar, which has lost its
yield appeal to the euro.
Euro-zone interest rates have remained at 4 percent since
June, but analysts reckon slower economic growth could force
the European Central Bank to move towards an easing path later
this year.
"The dollar has appreciated over the last couple of months
based on this change in attitude towards what the Fed is going
to be doing with interest rates," said Busch. "But we are
certainly not at a point where we are going to consider that
the Fed will start to raise rates at any point and that's why
see the dollar losing ground today."
U.S. Treasury debt prices were lower.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
9/32 to yield 3.85 percent. The 2-year U.S. Treasury note
<US2YT=RR> fell 2/32 to yield 2.46 percent. The 30-year U.S.
Treasury bond <US30YT=RR> fell 16/32 to yield 4.58 percent.
The weak dollar and the sharp rise in crude oil pushed gold
to a three-week high, with U.S. gold futures settling up
$19.90, or 2.3 percent, at $899.90 an ounce.
U.S. crude <CLc1> settled up $2.17 at $126.29 a barrel
after peaking at $127.82 earlier in the day. London Brent
<LCOc1> rose $2.36 to $124.99 after hitting $126.34.
Most stock markets across Asia rose modestly. Tokyo slipped
and Sydney surged back to closing levels last seen in January,
as top miner BHP Billiton <BHP.AX> jumped, propelled by
speculation of Chinese interest in the firm.
Japan's Nikkei average <> retreated 0.2 percent while
MSCI's index of other Asian stock markets <.MIAPJ0000PUS> rose
1.2 percent. Sydney's benchmark S&P/ASX 200 index <>
gained 0.7 percent.
(Reporting by Kristina Cooke, John Parry, Lucia Mutikani and
Nick Olivari in New York and Amanda Cooper in London; Editing
by Leslie Adler)
