* US stocks eke out gains, Dow, Nasdaq at 2009 closing highs
* Dollar higher, yen weakens in light year-end trading
* Crude oil rises on declining stockpiles, U.S. cold snap
* U.S. gold drops below $1,100 as dollar rallies
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Dec 30 (Reuters) - The U.S. dollar firmed across
the board on Wednesday and stocks eked out slight gains,
adding to this year's big rally, after much
better-than-expected business activity in the U.S. Midwest
bolstered hopes of recovery.
All three major U.S. indexes turned positive just as the
session ended, pushing the Dow and Nasdaq to fresh closing
highs for 2009 after U.S. stocks were lower for much of the
day.
European shares snapped a six-day winning streak in thin
trade and Japan's Nikkei slipped 0.9 percent in its final 2009
session.
The late rally put the benchmark S&P 500 index, along with
European shares, on track to post annual gains of about 25
percent after the Nikkei banked a 19 percent gain for 2009.
Oil rose for a sixth day as a mix of cold weather and
declining U.S. crude and fuel inventories lifted prices to
near $80, all but ensuring this year's gain will be the best
in a decade for crude. []
The dollar, which climbed to its highest since early
September against the Japanese yen, rallied as investors
looked for signs that economy is improving. Some traders moved
to safer assets like the dollar to lock in profits after a
strong 2009. []
Volumes were thin before the new year, adding to price
swings. Japanese markets will be closed on Thursday and
Friday, while European and U.S. markets will close on Friday.
"The trading ranges have been quite large today. It's
end-of-the-year positioning and fund managers are closing
their portfolios," said Amelia Bourdeau, senior currency
strategist at UBS in Stamford, Connecticut.
"There's also the view that the U.S. is recovering and
this month, we've seen strong U.S. data support the dollar,"
she said.
The Dow Jones industrial average <> rose 3.10 points,
or 0.03 percent, to end at 10,548.51. The Standard & Poor's
500 Index <.SPX> added just 0.22 of a point, or 0.02 percent,
to finish at 1,126.42. The Nasdaq Composite Index <>
gained 2.88 points, or 0.13 percent, to close at 2,291.28.
SOME WARMTH FROM ISM-CHICAGO
A report from the Institute for Supply Management-Chicago
bolstered the view of recovery, analysts said. The ISM-Chicago
business barometer surged to a four-year high, exceeding
economists' forecasts, on a recovery in employment and an
acceleration of new orders. []
But data in Europe showed that euro-zone money supply
posted a surprising drop in November and loans to households
and companies fell for the third month running. The data was a
warning to the European Central Bank that it must tread
carefully with its exit strategy. []
The FTSEurofirst 300 <> fell 0.4 percent to end at
1,043.24 points, pulling back from a 15-month closing high on
Tuesday. The index is on track for its best year since 1999.
Concerns about Japan's fiscal health weighed on the yen
after rating agency Standard & Poor's said Japan's credit
rating could be in danger if policy initiatives fail to
stabilize and gradually reduce the country's debt burden.
[]
"The dollar is gaining some traction and extending gains
from yesterday," said Kathy Lien, director of currency
research at GFT Forex in New York.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.10 percent at 77.910.
The euro <EUR=> was down 0.13 percent at $1.4334.
Against the yen, the dollar <JPY=> was up 0.47 percent at
92.43. Earlier, the dollar reached 92.77 yen, its highest
since Sept. 8.
U.S. Treasury prices were little changed following a $32
billion auction of seven-year notes as low trading volume
countered a positive take on the auction's outcome.
[]
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
up 2/32 in price to yield 3.79 percent.
OIL GAINS, GOLD RETREATS
U.S. crude for February delivery <CLG0> rose 41 cents, or
0.52 percent, to settle at $79.28 a barrel, briefly touching a
five-week high of $79.80. But crude failed to top the
psychologically important $80 level. Prices have risen for
nine of the last 11 sessions, gaining 14 percent in just over
two weeks.
London Brent crude <LCOc1> rose 39 cents to settle at
$78.03.
"The lack of volume is exaggerating some of the moves. The
bulls may want to try and test $80 and see if there is any
traction," said Gene McGillian, analyst at Tradition Energy.
Gold fell as the dollar rose on signs the U.S. economy is
on a path to recovery, denting gold's appeal as a hedge
against a further weakening of the greenback. []
U.S. February gold futures <GCG0> fell $5.60 to settle at
$1,092.50 an ounce in New York.
Asian stock markets fell as year-end trade dwindled, with
profit-taking pulling down shares.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up 0.05 percent to 411.63, below its
2009 high set in November, but still up nearly 66 percent this
year.
(Reporting by Caroline Valetkevitch, Gertrude
Chavez-Dreyfuss, Chris Reese in New York; Dominic Lau and Emma
Farge in London; Writing by Herbert Lash; Editing by Jan
Paschal)
