(Updates with Wall Street open, changes dateline; previous
LONDON)
By Kevin Plumberg
NEW YORK, April 17 (Reuters) - U.S. and European stocks
fell on Thursday, weighed by disappointing results from Merrill
Lynch and Nokia, while oil rose to a record high above $115 a
barrel.
The dollar recovered against the euro, bouncing off a
record low hit overnight after a top euro zone official said
financial markets misinterpreted a statement by the Group of
Seven rich nations last weekend that expressed concern about
fluctuations in major currencies.
Commodity prices rose, with copper, tin and U.S. rice
futures setting record highs, deepening a sense of crisis about
food prices.
However, many investors were focused on corporate earnings,
particularly since 82 percent of U.S. companies that have
reported their quarterly results have exceeded estimates,
according to JPMorgan. At this time last quarter, 43 percent of
companies had beat forecasts.
Wall Street firm Merrill Lynch <MER.N> bucked this trend,
posting a larger-than-expected first-quarter loss after taking
several billion dollars of subprime mortgage write-downs
.
Finland's Nokia <NOK1V.HE>, the world's biggest maker of
mobile phones, said it expects its market to fall this year and
reported a surprising decline in the average selling price for
its phones. The company's shares dropped 13.5 percent.
"It's earnings season so that's going to trump everything
else as far as news flow unless the economic numbers are really
bad," said Alan Lancz, president of Alan B. Lancz & Associates
Inc, in Toledo, Ohio.
At midday, the Dow Jones industrial average <> was down
37.78 points, or 0.30 percent, at 12,581.49. The Standard &
Poor's 500 Index <.SPX> was down 6.05 points, or 0.44 percent,
at 1,358.66. The Nasdaq Composite Index <> was down 19.40
points, or 0.83 percent, at 2,330.71.
In Europe, the FTSEurofirst 300 index <> finished
down 7.31 points, or 0.6 percent, at 1,295.47.
Tokyo's Nikkei share average ended 1.9 percent higher,
rising for a third consecutive day on hopes that solid earnings
from IBM <IBM.N> reported on Wednesday will boost Japanese
companies.
The euro <EUR=> was down 0.16 percent at $1.5924 after
touching an all-time high near $1.60. Against the Japanese yen,
the dollar <JPY=> was up 0.45 percent at 102.24 yen.
The euro backed off its record in early New York trade
after Eurogroup head Jean-Claude Juncker said excessive
exchange rate volatility was bad for global growth and called
euro gains against the dollar "undesirable." The Eurogroup
comprises the finance ministers of the 15-country euro zone.
"The market is chasing its tail today, trying to take out
$1.60 overnight before Juncker's comments took everyone by
surprise and wiped out some euro longs," said Steven Butler,
head of FX trading at Scotia Capital in Toronto.
Despite the volatility in global stock markets, the flight
to safe-haven government debt has eased in recent days.
U.S. Treasury debt prices slipped, sending yields higher,
as bond investors consolidated around the view that the Federal
Reserve will cut its benchmark interest rate by only 25 basis
points at the end of April and then pause.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 4/32, with the yield at 3.7273 percent. The 2-year U.S.
Treasury note <US2YT=RR> fell 7/32, with the yield at 2.099
percent.
The yield on 10-year euro zone government debt <EU10YT=RR>
rose to 4.08 percent, from 4.04 percent on Wednesday.
Oil <CLc1> steadied after setting a record high earlier in
the session as a drop in U.S. gasoline and crude inventories
raised concern of tighter supply.
A U.S. government report on Wednesday showed a surprise
drop in crude inventories and a larger-than-expected decline in
stocks of gasoline.
U.S. crude hit a record $115.54 a barrel but later slipped
to $114.82, down 11 cents on the day. Oil has hit new peaks for
three consecutive days.
"Summer driving season is approaching. And even in a
recessionary economy, seasonal gasoline demand will pick up,
which adds to stress on the global oil supply chain," said Jan
Stuart at UBS in a research note.
(Editing by Dan Grebler)
