* Euro falls to 6-month low vs dollar on Greece concerns
* Greece's fiscal woes spark safe-haven bid for bonds
* Oil falls towards $74 a barrel after U.S. inventory data
* Equity markets slip on rising investor risk aversion
(Updates with U.S. markets, changes byline; dateline
previously LONDON)
By Herbert Lash
NEW YORK, Jan 27 (Reuters) - The U.S. dollar rose on
Wednesday to a six-month high against the euro and bond prices
fell on worries over Greece's fiscal problems amid a renewed
bid for safe-havens after a surprise drop in U.S. sales of new
home.
The stronger dollar helped knock down the price of gold,
oil and industrial metals as investors were cautious ahead of a
policy announcement later in the day from the U.S. Federal
Reserve. []
Investors were also awaiting U.S. President Barack Obama's
first State of the Union address at 9 p.m. (0200 GMT Jan. 28),
when he is expected to promise more jobs creation and a slimmed
budget deficit.
U.S. stocks fell after new home sales dropped unexpectedly
in December, while heavy equipment maker Caterpillar Inc
<CAT.N> and diversified manufacturer United Technologies Corp
<UTX.N> provided guarded outlooks for the months ahead.
[]
European shares fell, with banks the main drag following
poor quarterly results from Spanish lender BBVA <BBVA.MC>.
"There is risk aversion about extending capital into the
market place," said Craig Peckham, equity trading strategist at
Jefferies & Company in New York.
Peckham said there was concern about potential changes in
an expected statement by the Federal Open Market Committee at
about 2:15 p.m. (1915 GMT) after Federal Reserve policy makers
conclude their two-day meeting. The Fed is expected to leave
interest rates near zero percent.
Obama's speech also was playing on investors' nerves.
"We've got some jitters about what we may get out of the
State of the Union tonight," said Peckham.
Shortly after midday, the Dow Jones industrial average
<> was down 32.34 points, or 0.32 percent, at 10,161.95.
The Standard & Poor's 500 Index <.SPX> was down 3.42 points, or
0.31 percent, at 1,088.75. The Nasdaq Composite Index <>
was up 0.30 points, or 0.01 percent, at 2,204.03.
The FTSEurofirst 300 <> index of leading European
shares closed down 0.9 percent at 1,013.83 points.
Concerns over Greece weighed on all markets. The spread of
the 10-year Greek bond yield over benchmark German Bunds rose
to its highest since Greece adopted the euro currency in 2001.
"Greece is a great problem," said Giuseppe-Guido Amato,
strategist at Lang & Schwarz in Frankfurt.
"If the uncertainty related to Greece is increasing then
you see the dollar firm against the bunds. The strengthening of
the dollar is correlated with falling markets."
Greece denied press reports it had chosen Goldman Sachs
<GS.N> to sell up to 25 billion euros ($35 billion) of bonds to
China, though it reiterated plans for an investor roadshow in
Asia.
Greek government bonds were crushed after the denial.
"The real issues in the market are: what's going on with
Greece; what the Fed is going to say later today. Also, they're
scared about Obama's speech tonight and the attacks on the
banks, and so on," said James Combias, head of government bond
trading at Mizuho Securities USA, in New York.
He noted that U.S. home sales added to pressures but
remained a lesser factor in the markets.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
3/32 in price to yield 3.61 percent.
In early trading, the euro <EUR=> slipped 0.23 percent to
$1.404 after hitting a low of $1.4022, the lowest since the end
of July, according to Reuters data.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.20 percent at 78.591.
Against the yen, the dollar <JPY=> was down 0.22 percent at
89.42.
Oil prices fell toward $74 a barrel, pressured by a mixed
inventory report from the United States and a stronger dollar.
[]
U.S. oil for March delivery <CLc1> fell 20 cents to $74.51,
after touching an intraday low of $73.90. London ICE Brent for
March <LCOc1> rose 11 cents to $73.40.
U.S. crude oil stockpiles fell unexpectedly by 3.9 million
barrels last week while distillates showed a surprise gain, the
Energy Information Agency reported, with analysts attributing
draws to weather-related delays in the Gulf of Mexico.[]
Spot gold prices <XAU=> fell $4.90 to $1,092.70 an ounce.
Asian stocks fell for the eighth straight day on Wednesday
on fears that China's heightened efforts to rein in soaring
credit growth could hamper the global economic recovery.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 1 percent, while Japan's Nikkei average
<> fell 0.7 percent to a five-week low.
(Editing by Leslie Adler)
