* U.S. stocks slip as investors weigh Obama's housing plan
* U.S dollar at 6-week high vs yen, euro at 3-month low
* Government debt falls on U.S. plan to stem foreclosures
* U.S. oil prices slide as demand falls, inventories rise
(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, Feb 18 (Reuters) - U.S. stocks slipped and
government debt prices fell on Wednesday as investors worried
about the cost and effectiveness of President Obama's new $275
bln plan to try to shore up the slumping U.S. housing market.
More dismal economic data bolstered the safe-haven bid for
gold and the U.S. dollar, while U.S. oil prices fell below $35
a barrel on renewed concerns about rising crude inventories and
falling demand.
Data showing U.S. housing starts and building permits
dropped to record lows in January weighed on markets, as
builders shelved construction plans to try to clear a glut of
unsold houses caused by the slump in demand. For details,
please see []
Further darkening the picture for an economy mired in a
13-month-old recession was U.S. industrial output, which shrank
more than expected in January. The measure of manufacturing
capacity being tapped hit its lowest level on record.
The news came as U.S. President Barack Obama pledged up to
$275 billion to help stem home foreclosures, the latest step in
his multi-pronged efforts to turn around the U.S. downturn.
[]
Analysts presume the plan will further expand government
borrowing, which already is expected to reach $2 trillion this
year alone, and double U.S. financial support for mortgage
finance companies Fannie Mae and Freddie Mac. []
"Bottom line, it's going to lead to more and more debt,"
said Mary Ann Hurley, vice president of fixed-income trading at
D.A. Davidson & Co. in Seattle.
U.S. Treasury bond prices retreated [] and
Wall Street ended mostly lower after a choppy session. Shares
in Europe closed down for a third straight session as Obama's
plan was met with skepticism and fears of a deepening
recession.[]
Investors also were uncertain about how the plan would
work. A lack of specifics smacked of a widely panned bank
rescue plan unveiled last week by U.S. Treasury Secretary
Timothy Geithner.
"There aren't a lot of specifics, running into the same
problem as you did with Geithner and his speech a week ago,"
said Al Goldman, chief market strategist at Wachovia Securities
in St. Louis.
The Dow closed slightly higher after a see-saw session but
the broader S&P 500 and Nasdaq indexes closed down. On the Big
Board, 324 stocks of 3,161 traded hit new 52-week lows.
The Dow Jones industrial average <> rose 3.03 points,
or 0.04 percent, at 7,555.63. The Standard & Poor's 500 Index
<.SPX> fell 0.75 points, or 0.10 percent, at 788.42. The Nasdaq
Composite Index <> shed 2.69 points, or 0.18 percent, at
1,467.97.
The pan-European FTSEurofirst 300 <> index of top
shares fell 0.3 percent at 763.36 points.
U.S. Treasuries fell. The benchmark 10-year U.S. Treasury
note <US10YT=RR> slipped 26/32 in price to yield 2.75 percent.
The 2-year U.S. Treasury note <US2YT=RR> fell 6/32 in price to
yield 0.96 percent.
The dollar stormed above 93 yen for the first time in six
weeks amid growing worries about a steep contraction in Japan.
Against the euro, the dollar neared a three-month high on
concerns a deep recession in Eastern Europe would damage to
western European banks. []
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.34 percent at 88.063. Against
the yen, the dollar <JPY=> gained 1.60 percent at 93.83.
The euro <EUR=> fell 0.36 percent at $1.2543.
A report from the American Petroleum Institute to be
released Wednesday afternoon is expected to show U.S. crude
stockpiles rose last week by 3 million barrels to the highest
level since May 1998. []
U.S. crude <CLc1> for March delivery slipped 31 cents to
settle at $34.62 a barrel, while U.S. crude for April delivery
<CLc2> fell $1.13 to $37.41. London Brent <LCOc1> for April
delivery fell $1.48 to $39.55.
U.S. gold futures set a fresh seven-month high and advanced
in the after-market as risk averse investors continue to view
the yellow metal as an inflation hedge and a safe haven.
Gold for April delivery <GCJ9> closed $10.80 higher at
$978.30 an ounce in New York.
(Reporting by Ellis Mnyandu, Pedro Nicolaci da Costa, Wanfeng
Zhou in New York; Lucia Mutikani in Washington and Joanne
Frearson, Emelia Sithole-Matarise and Chris Baldwin in London;
writing by Herbert Lash; Editing by Dan Grebler)
