(Adds U.S. market open, changes byline, dateline)
By Herbert Lash
NEW YORK, Feb 4 (Reuters) - Wall Street stocks slipped on
Monday as credit worries again plagued financial companies'
shares after European stocks had managed a recovery on a recent
spate of mergers that included the Microsoft bid for Yahoo.
Crude futures rose to nearly $90 a barrel, bouncing on
technical support after sliding 3 percent on Friday. Bonds
dropped on profit taking following a recent rally in
anticipation of last week's U.S. Federal Reserve rate cut.
The dollar was relatively stable after being hampered last
week by the bearish impact of the interest rate cut and weak
economic data, capped by Friday's surprising January U.S. jobs
decline.
Broker UBS suggested that credit card provider American
Express Co <AXP.N> could be hit by rising credit losses as
consumers become strapped in the economic slowdown. A Dow
component, it led the U.S. sell-off among financials.
Shares of home builders and retailers also fell after
strong buying last week by investors in search of bargains in
the wake of recent market turbulence.
"The market has had a huge rally and a lot of people feel
that's enough in the short term, so traders are taking
profits," said Michael Metz, chief investment strategist at
Oppenheimer & Co in New York.
"There's no convincing evidence that the worst is behind
us. It seems we've had a technical bounce and it's time to take
money off the table," he said.
Adding to the concern about the U.S. economy was a
government report that showed factory orders rose less than
expected in December.
The Dow Jones industrial average <> was down 80.56
points, or 0.63 percent, at 12,662.63. The Standard & Poor's
500 Index <.SPX> was down 11.04 points, or 0.79 percent, at
1,384.38. The Nasdaq Composite Index <> was down 20.63
points, or 0.85 percent, at 2,392.73.
In Europe the industrial sector provided some of the
strongest upside but stocks pared earlier gains on news of the
U.S. equity markets and economic reports. Vestas <VWS.CO> rose
7.7 percent after the world's top wind power plant producer
raised its 2007 sales and profit outlook.
The FTSEurofirst 300 index <> rose 0.8 percent on the
day while MSCI main world equity index <.MIWD00000PUS> was up
0.7 percent, hitting highs last seen in mid-January.
Emerging stocks <.MSCIEF> and Asian stocks <.MSCIAPJ> were
both up more than 2 percent. Emerging sovereign spreads <11EMJ>
tightened 3 basis points. The March Bund future <FGBLH8> was
down 27 ticks.
Euro zone government bonds fell as last week's merger and
acquisition optimism restored some confidence in Asian and
European shares and investors locked in profits from the recent
rally in safe-haven government debt.
"It's been very much a day of going backwards and forwards
with the equity markets," said Marc Ostwald, a bond analyst
with Insinger de Beaufort in London.
Traders cited Turkish attacks on northern Iraq, fog
shutting the Houston Ship Channel and U.S. intent to buy more
crude for its petroleum reserve as reasons for rising oil
prices.
In London, March Brent crude <LCOH8> was up 0.92 percent at
$90.26 per barrel, while in New York, March crude <CLH8> was up
1.02 percent at $89.87 a barrel,
"The market sold off hard on Friday for no apparent reason,
so perhaps (it's) just regaining its footing today," said Tom
Bentz, an analyst at BNP Paribas Commodity Futures Inc.
In New York, the dollar was up 0.15 percent against the yen
at 106.77 yen <JPY=> and the euro was up 0.3 percent against
the Japanese currency at 158.24 yen <EURJPY=R>.
The Australian dollar hit a three-month high against the
U.S. currency <AUD=> before Australia's expected increase in
benchmark interest rates to an 11-year peak of 7.0 percent this
week.
Platinum roared to a record high and palladium hit a
six-year peak on Monday as supply concerns persisted in top
producer South Africa due to an electricity crisis, analysts
said.
But gold and silver slipped after setting new peaks on
Friday. Analysts said the metals were consolidating gains
before starting their march again to scale new highs.
Spot gold prices <XAU=> fell 1.57 percent, to $895.75.
(Additional reporting by Ellis Mnyandu, Chris Reese and
Vivianne Rodrigues and Natsuko Waki, Randy Fabi, Atul Prakash
and Emelia Sithole-Matarise in London
(Reporting by Herbert Lash. Editing by Richard Satran)
