* Stocks turn negative on financials sell-off
* Oil prices above $81 on U.S. gasoline inventories
* Dollar weakens on interest rate anxiety
(Recasts, updates with closing prices)
By Manuela Badawy
NEW YORK, Oct 21 (Reuters) - U.S. stocks closed weaker on
Wednesday after an influential bank analyst recommended selling
Wells Fargo, while the euro broke above $1.50 for the first
time in 14 months on expectations U.S. interest rates will stay
low.
The Dow Jones industrial average <> closed 0.92 percent
lower at 9,948.83, after Rochdale Research analyst Richard Bove
cut his rating on Wells Fargo's <WFC.N> stock, saying loan
losses were mounting. The KBW bank index <.BKX> dropped 2.4
percent. Shares of Wells Fargo slid 5.1 percent to $28.90.
"It just shows you how susceptible we are to bad news right
now," said Stephen Massocca, managing director at Wedbush
Morgan in San Francisco. "We've got such an extended stock
market that a feather of news is enough to cascade it down 100
points."
The San Francisco-based bank had reported a 60 percent jump
in third quarter profits earlier in the day.
A wider-than-expected loss from Boeing <BA.N> also
disappointed investors.
Morgan Stanley <MS.N> also reported better-than expected
quarterly profit earlier in the day, citing strong fixed income
sales and trading revenue and improved investment banking
underwriting results, sending its shares up 6.9 percent. For
more see [].
MSCI's world stock index <.MIWD00000PUS> fell 0.24 percent,
in tandem with the U.S. market.
The FTSEurofirst 300 <> index of top European shares
rose 0.45 percent, recouping almost all Tuesday's losses and
taking it near its highest close since Oct. 3, 2008.
Oil prices <CLc1> rose more than 3 percent, above $81 a
barrel, the highest in a year after U.S. government data showed
gasoline stockpiles fell a lot more than expected last week.
This supported energy stocks and emerging economies, which are
set to recover at a faster speed than some developed markets.
China's voracious appetite for commodities and continued
growth has helped countries such as Brazil, where heavyweight
companies such as energy company Petrobras <PETR4.SA> and miner
Vale <VALE5.SA> are tied to the trade in raw materials.
MSCI's Latin American stock index <.MILA00000PUS> rose 0.89
percent, easing from a 2.5 percent gain earlier in the day.
INTEREST RATE ANXIETY
U.S. Treasury debt prices fell, with the benchmark 10-year
U.S. Treasury note <US10YT=RR> down 12/32 to yield 3.38
percent.
Treasuries also tracked European bond markets lower after
comments from the Bank of England triggered a fresh round of
anxiety about the eventual withdrawal of monetary stimulus and
even interest-rate hikes. []
The dollar fell 0.75 percent against a basket of other
major currencies <.DXY>, hitting a fresh 14-month low of 74.94
reaching its 10th loss in 15 sessions this month.
Whether the euro, the biggest component of the basket,
pushes higher depends to some extent on U.S. stocks and crude
oil futures.
The dollar and commodities are often inversely correlated,
with gold and oil priced in dollars and seen as an alternative
currency and hard asset themselves.
Sentiment towards the dollar continues to be hurt by the
prospect of benchmark U.S. interest rates staying at
exceptionally low levels. Low rates make the dollar less
attractive to investors than higher-yielding currencies more
closely correlated with economic recovery.
The British pound gained 1.25 percent against the U.S.
dollar to $1.6591 <GBP=>, and heavy dollar selling helped push
the euro to $1.5007<EUR=D2> , up 0.45 percent.
In China, the State Council said economic recovery had been
"consolidated," a shift in rhetoric some analysts say may be a
first hint that officials are at least thinking about how to
normalize loose monetary and fiscal polices. []
(Additional reporting by Ellis Mnyandu; Editing by Kenneth
Barry)
