* Chinese raises rates in move to quell rising inflation
* Blizzard in northeast U.S. limits trade
* Oil prices come off 26-month high after China move.
(Releads with closing U.S. prices, adds comment)
By Daniel Bases
NEW YORK, Dec 27 (Reuters) - U.S. stocks closed little
changed and the dollar lost ground to the euro in thin trade on
Monday, buffeted by China's Christmas Day interest rate hike
and a blizzard that pounded the northeastern United States.
The quarter-point rate increase by the People's Bank of
China was the second in just over two months, and while the
timing just before year-end may have been a surprise, the move
itself was not. China's leaders have pledged to make fighting
inflation a top priority in 2011, indicating more rate rises to
come.
Oil prices dipped after briefly hitting a 26-month peak as
the Chinese rate hike raised fears of slowing demand. Gold
prices ended down marginally.
European stock markets fell on China's move, although with
the UK on holiday until Wednesday, trading activity was
limited.
Despite the modest losses in some markets, many global
share price indexes hover near two-year highs.
"The market is pretty much flat but we ended well off our
lows and although we have no buyers stepping in, we have to
give the bulls the victory seeing how the market turned
around," said Ryan Detrick, technical analyst at Schaeffer's
Investment Research at Cincinnati, Ohio.
The week between Christmas and New Year's is typically
considered "the Santa Claus rally time," Detrick said, adding
that he expects gains on Wall Street to resume later in the
week.
On Wall Street, the Dow Jones industrial average <>
fell 18.46 points, or 0.16 percent, to 11,555.03. The Standard
& Poor's 500 Index <.SPX> gained 0.77 points, or 0.06 percent,
to 1,257.54. The Nasdaq Composite Index <> rose 1.67
points, or 0.06 percent, to 2,667.27.
Financial stocks rose, in part boosted by a rally in
American International Group <AIG.N> shares after it secured
$4.3 billion in bank credit lines, taking another step toward
winding down its U.S. government support. AIG shares gained
9.3 percent, or $5.05, to $59.38, after earlier hitting a
two-year high.
In Europe, the FTSEurofirst 300 <> ended 0.87 percent
lower at 1,137.49.
The STOXX Europe 600 Automobiles & Parts index <.SXAP> was
the worst-hit sector, down 3.9 percent on concern China's rate
hike could dent demand for cars from Chinese consumer. Last
Friday's news that Beijing aims to tackle congestion in China's
capital by limiting new-car registrations also weighed on auto
shares. []
The pan-European index has gained 6.6 percent in December
and, in spite of the Monday's hefty fall, is still on track to
record its biggest monthly gain since March.
China's central bank on Saturday announced a hike in the
benchmark lending rate by 25 basis points to 5.81 percent and
an increase in the benchmark deposit rate by 25 basis points to
2.75 percent. []
On Monday the PBOC took aim at inflation once again by
saying prudent monetary policy would be helpful in combating
price pressures and asset bubbles. []
Japan's Nikkei <> rose 0.75 percent, extending its
recent outperformance in Asia. The MSCI All Country World index
<.MIWD00000PUS> dipped 0.12 percent.
Early indications pointed to a positive opening for stocks
in Tokyo on Tuesday. The March Nikkei futures contract traded
in Chicago was up 35 points at 10,355 <NKH1>.
EURO GAINS
Normally thin post-holiday trading was made more so by the
severe weather in the U.S. northeast, hampering commuter
travel.
The euro rose after shaking off losses below its 200-day
moving average, a move that is usually indicative of more
losses. While fears that a euro-zone debt crisis could spread
have pushed the euro below the 200-day moving average --
$1.3087, according to Reuters data -- in five of the last six
sessions, it has rebounded swiftly each time. It was last up
0.36 percent at $1.3162 <EUR=>.
"With no economic news, we're focusing on these technical
factors, and that push above the 200-day average has been a
catalyst for the euro," said Omer Esiner, strategist at
Commonwealth Foreign Exchange in Washington. "And with London
off and the blizzard in New York, things are very subdued."
Against the yen, the dollar fell 0.08 at 82.79 yen <JPY=>.
Earlier, it had fallen to a three-week low in Asian trading
hours.
The benchmark 10-year U.S. Treasury note rallied 15/32 of a
point in price, pushing the yield down to 3.33 percent after a
strong auction for $35 billion in two-year paper.<US10YT=RR>.
"Despite a relatively low-volume day, it performed very
well," said Jim Golden, head of Treasury trading at Jefferies &
Co in New York.
In commodities markets, oil prices pulled back from a
26-month high in response to China's action, which countered
the influence of severe cold weather in the United States and
Europe.
U.S. crude for February <CLc1> fell 51 cents to settle at
$91 a barrel, after hitting an intraday peak of $91.88 -- the
highest since October 2008.
Spot gold prices <XAU=> dropped 95 cents, or 0.07 percent,
to $1,383.13 an ounce. Bargain hunters stepped in to buy after
the initial jolt from China's rate decision.
Grain prices were generally stronger with corn at a
29-month high and soy at a near 28-month high due to hot and
dry weather in Argentina, the No. 3 oilseed
exporter.[]
Chicago Board of Trade soybeans for January <Sc1> delivery
closed up 23-1/2 cents at $13.73, after posting a session high
and new contract high of $13.78-1/4, the highest point for a
spot month contract since September 2008.
"There is nothing like a supply-driven crop scare to trump
other factors," Rich Feltes, vice president of research at
brokerage R.J. O'Brien & Associates, said about Argentina.
(Additional reporting by Steven C. Johnson, Angela Moon, Mike
Peacock, Carey Gillam, and Joe Rauch; Editing by Leslie Adler)
