(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
* U.S. stocks rebound after China raises fuel prices
* Crude oil fall $4 to below $133 a barrel on China move
* Dollar firms as China lifts prices 18 pct; bonds ease
By Herbert Lash
NEW YORK, June 19 (Reuters) - Oil prices tumbled on
Thursday after China raised fuel prices in a move that could
boost supply elsewhere and alleviate pressures on Western
economies, triggering gains in U.S. equities and the dollar.
Crude fell $4 to below $133 a barrel on the belief demand
will take a hit after China raised gasoline and diesel prices
by up to 18 percent -- its first hike in eight months.
Rising oil prices have fanned inflation worries and fears
of slower economic growth around the world. U.S. stocks rose on
hopes falling crude demand will ease inflation pressures and
stop braking the economy.
Todd Clark, managing director of stock trading at
Nollenberger Capital Partners in San Francisco, said that the
news on energy costs was positive for retailing and other
shares, although "until financials can stabilize, it's tough to
be overly positive about the market."
The Dow Jones industrial average <> was up 13.10
points, or 0.11 percent, at 12,042.16. The Standard & Poor's
500 Index <.SPX> was up 0.63 points, or 0.05 percent, at
1,338.44. The Nasdaq Composite Index <> was up 19.40
points, or 0.80 percent, at 2,449.11.
More signs of a sluggish U.S. economy and a senior
executive's warning of further write-downs at Citigroup helped
put a damper on shares in Europe and the United States.
Gary Crittenden, Citigroup's chief financial officer, told
investors on a investor conference call that the largest U.S.
bank could have substantial write-downs in the second quarter,
triggering a near 4 percent drop in its shares.
The Philadelphia Federal Reserve Bank said its business
activity index, which measures Mid-Atlantic factory activity,
was minus 17.1 in June, below the minus 10 reading economists
had forecast. Any reading below zero indicates contraction.
"Wall Street's earnings forecasts have to be trimmed for
the second-quarter and the second-half of the year. Estimates
on earnings have been lagging reality," said Subodh Kumar,
chief investment strategist at Subodh Kumar & Associates in
Toronto.
European shares closed lower, driven by weaker banks and
technology stocks on concerns of further write-downs at
mortgage lender HBOS <HBOS.L> and market talk of lowered
guidance at semiconductor maker ASML <ASML.AS>.
Banks were the largest decliners in Europe by market
weighting, with HBOS shedding 7 percent after warning of a 1
billion pound ($1.96 billion) write-down in its first half as
declining housing prices put pressure on bad debts.
"It's pretty grim. For a reasonable part of the United
States, the economic signals are not encouraging," said Stephen
Pope, chief global market strategist at Cantor Fitzgerald
Europe.
European stocks had earlier rallied after unexpected news
of a British shopping spree last month that pushed retail sales
up 3.5 percent, their fastest monthly rate since the series
began in 1986.
But an unexpectedly weak reading of factory activity in the
U.S. Mid-Atlantic region in June later pushed stocks lower on
both sides of the Atlantic.
The FTSEurofirst 300 index <> of top European shares
ended down 0.5 percent at 1,244.77 points.
The dollar rose, buoyed by a sharp drop in crude oil prices
and a decision by the Swiss National Bank to keep interest
rates steady despite record-high inflation. Fear that European
rate rises will draw funds away from the lower yielding U.S.
currency has hurt the American unit.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.10 percent at 73.481. Against the yen,
the dollar <JPY=> rose 0.11 percent at 107.97.
The euro <EUR=> was down 0.24 percent at $1.5496.
Sterling, meanwhile, rose to its highest level in over a
week against the dollar and rallied versus the euro after
strong British retail sales raised speculation the Bank of
England might hike British borrowing costs from 5 percent.
"Oil is coming off and that has helped the dollar. We have
news that China will raise diesel prices and that has helped
put offers on crude," said Matt Kassel, director of foreign
exchange trading at ING Capital Markets in New York.
U.S. light sweet crude oil <CLc1> was off $3.78 to
$132.90.
Higher oil prices have weighed on the dollar on views they
would stifle economic growth in the United States, the world's
largest consumer.
Gold <XAU=> climbed back through $900 an ounce to a 10-day
high earlier in the day as rising oil prices sparked buying as
an inflation hedge and sent the precious metal through key
technical levels.
Gold touched $907.90, its highest since June 9, before
easing as oil declined to trade at $901.50/902.50 in New York.
"Gold is starting to find its feet, given the global
(inflationary) environment we are in, and given what we have
seen coming out in terms of U.S. data releases," said Simon
Weeks, director of precious metals trading at Scotia Capital.
"General sentiment is good."
Asian stocks dropped, after the Dow Jones closed at a
three-month low, with Japan's Nikkei share average <>
finished 2.2 percent lower.
Shares elsewhere in the Asia-Pacific region fell 1.7
percent, snapping three days of gains and bringing declines
year-to-date to 16 percent, an MSCI index <.MIAPJ0000PUS>
shows.
(Reporting by Jennifer Coogan, Ellen Freilich, Deborah Jian
Lee, Lucia Mutikani and Nick Olivari in New York, and Naveen
Thukral and Patrizia Kokot in London)
(Reporting by Herbert Lash. Editing by Richard Satran)
