By Leslie Adler
NEW YORK, Feb 8 (Reuters) - Technology stocks rose in both
the United States and Europe on Friday as bargain-hunters
bought up shares in the downtrodden sector, but recession fears
drove the broader U.S. market lower.
Fears about the precarious state of the U.S. economy,
highlighted by remarks late on Thursday by a Federal Reserve
official who said she was "not confident" a recession could be
avoided this year, sparked a rally in U.S. Treasury debt
prices. Worries about credit markets also raised the safe-haven
allure of U.S. government bonds and helped them recover from
their worst rout in four years.
Shares of financial companies fell both in the United
States and Europe, driven by unease about the outlook for bond
insurers and fears that a slowdown in business and consumer
spending would reduce borrowing and hurt profits.
"There is that fear angle still out there," said David
Coard, head of fixed-income sales and trading at the Williams
Capital Group in New York. "Add to that the fear of recession
and that is what is helping to give Treasuries a better bid
here."
The Dow Jones industrial average <> was down 98.11
points, or 0.80 percent, at 12,148.89. The Standard & Poor's
500 Index <.SPX> fell 8.53 points, or 0.64 percent, to
1,328.38. The Nasdaq Composite Index <> was up 2.15
points, or 0.09 percent, at 2,295.18.
The S&P Financial index <.GSPF> was down 2.34 percent.
"There's still a fear of unknowns over the weekend, a mini
disaster that could affect us going into Monday," said John
O'Brien, senior vice president at MKM Partners LLC in
Cleveland. "There's still the fear that Merrill has more
(write-downs) to go, and Citigroup has more to go."
Technology stocks, however, remained strong. Shares of
Microsoft Corp <MSFT.O>, a Dow component, gained 1.7 percent,
and shares of iPod maker Apple Inc <AAPL.O> rose 2.3 percent.
"Tech was very oversold and at its lowest extreme, so we
expected it to bounce," said Cleveland Rueckert, market analyst
at Birinyi Associates Inc in Stamford, Connecticut. "The Nasdaq
is (more than) 10 percent below its 50-day moving average, so
it's not surprising to see a bounce."
In Europe, gains in technology and mining shares propelled
the FTSEurofirst 300 index <> to close 0.5 percent
higher at 1,302.36 points, although it lost 3.7 percent on the
week. The MSCI main world equity index <.MIWD00000PUS> was down
0.13 percent.
Shares of top cell phone maker Nokia <NOK1V.HE> rose 3.1
percent and Ericcson <ERICb.ST> gained 3.3 percent, but French
bank Credit Agricole <CAGR.PA> lost 4.1 percent and BNP Paribas
<BNPP.PA> shed 2 percent.
Investor sentiment remained fragile, putting the focus
firmly on a weekend meeting of Group of Seven finance chiefs in
Tokyo, which will discuss policy responses to the deteriorating
economic climate.
ECB TO JOIN EASING CAMPAIGN?
In currency markets, the euro recovered a little but
remained on track for its biggest weekly fall versus the dollar
in one-and-a-half years amid growing expectations the European
Central Bank will cut interest rates later this year.
"It became clear this week that the economic slowdown has
been moving East and that Europe is not insulated," said Mark
Meadows at Tempus Consulting in Washington D.C. "The euro
suddenly came under pressure and it may continue so for a
while."
By late morning in New York, the euro was up 0.2 percent at
$1.4514 <EUR=> but still down almost 2 percent since Monday.
Against the yen, the euro was up 0.2 percent at 156.03 yen
<EURJPY=>.
Among G7 nations, central banks in the United States,
Britain and Canada have cut interest rates to boost their
economies, while the Bank of Japan and the ECB have held
steady.
The March Bund future <FGBLH8> was down 11 ticks.
In commodities markets, U.S. crude oil futures rose more
than $2 to top $90 a barrel on supply concerns raised by Exxon
Mobil Corp's dispute with Venezuela, snags in Nigeria and
cooler U.S. Northeast weather.
On the New York Mercantile Exchange, March U.S. light crude
oil <CLc1> rose 4.0 percent to $91.63 a barrel.
The jump in oil prices helped fuel a rise in gold <XAU=>,
which gained more than 1 percent.
(Additional reporting by Natsuko Waki, Rebekah Curtis, editing
by Dan Grebler)
