(Updates with U.S. markets, changes byline, pvs LONDON)
By Herbert Lash
NEW YORK, Jan 14 (Reuters) - A strong earnings forecast
from technology leader IBM helped Wall Street to one of its few
gains of a gloomy new year on Monday, but the dollar continued
on its path to record lows as recession worries lingered.
IBM surprised analysts with a preliminary statement touting
a 10 percent jump in fourth quarters sales, though most of the
increase was linked to foreign operations that generate more
revenue as their currencies rise against the sagging dollar.
The U.S. currency's drop also buoyed gold and oil. European
shares rallied on IBM's result's, after losing ground for six
sessions in a row, led by tech giants Nokia <NOK1V.HE> and
Germany's SAP <SAPG.DE>.
"Big Blue helped us. You could be bullish on tech, and
anybody with business abroad is going to be helped by the lower
dollar," said Warren Simpson, managing director at Stephens
Capital Management in Little Rock, Arkansas.
The dollar slid into a record trough versus the Swiss franc
and seven-week lows against the euro and yen. Analysts said in
part this reflected concerns about weak U.S. corporate profits,
which are expected to fall 9.1 percent in the fourth quarter
from a year earlier, according to Reuters Estimates.
Still, IBM's strong showing put a more positive spin on the
impending earnings season, especially for tech companies that
have big foreign operations like Intel, up 4.05 percent to
$22.88 and Dell, up 2.6 percent to $21.30.
The Dow Jones industrial average <> was up 116.08
points, or 0.92 percent, at 12,722.38. The Standard & Poor's
500 Index <.SPX> was up 9.43 points, or 0.67 percent, at
1,410.45. The Nasdaq Composite Index <> was up 28.52
points, or 1.17 percent, at 2,468.46.
The tech stocks have been among the weakest sectors in the
market. The tech-heavy Nasdaq was still down about 7.2 percent
since the start of the year, and the Dow down about 4.3
percent. B
But many were skeptical that the day's upturn will have
much staying power, given the woes faced by the economy,
exacerbated by concerns over tight credit globally.
"It may not be enough to carry (the Dow) back up to 13,000.
We still have myriad problems from credit issues to inflation,"
said Stephens Capital's Simpson.
Markets in general have been ruled by speculation that
Federal Reserve will need to cut rates soon, which could
undermine the dollar further.
Gold shot to a record $914 on expectations of a sharp cut
in U.S. interest rates and further dollar weakness.
Oil rose to nearly $94 a barrel amid a wider commodities
rally fueled in part by the dollar drop, and bond prices fell
on expectations the Federal Reserve will slash interest rates
by a half a percentage point at the end of the month in an
effort to spur the economy.
Recession fears were further fanned by a report from
Goldman Sachs that the U.S. economy was likely to tip into
recession, even though IBM added a counterweight with its
higher-than-expected preliminary results ahead of its scheduled
report on Thursday.
The FTSEurofirst 300 index <> of top European shares,
buoyed by IBM and Wall Street, ended up 0.3 percent higher at
an unofficial 1,433.20 points, down from a session high at
1,437.97 points. Banks were the top performing sectors as
expectations mounted for more growth-promoting rate cuts from
the Fed and other major central banks.
MSCI's main world stock index <.MIWD00000PUS> was up 2.58
percent and its emerging market gauge <.MSCIEF> up 3.86
percent.
Japan's stock markets were closed for a holiday.
Gold's surge prompting buying of other precious metals,
with platinum hitting a record high before giving up some gains
and silver was quoted below a 27-year peak.
"It's human nature to buy into a market that is already
showing strength," said Robin Bhar, metals analyst at UBS
Investment Bank. "Gold could go higher still, but we don't
think this is a right time for buying."
Spot gold <XAU=> rose $12.15, or 1.36 percent, to $907.55.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand.
The euro <EUR=> was up 0.78 percent at $1.489 and against
the yen, the dollar <JPY=> was down 0.82 percent at 108.07.
Oil halted a three-day losing streak as fear of
U.S.-Iranian tensions as well as violence in Nigeria rekindled
worries of potential oil supply disruption and boosted prices.
The oil market is caught between short-term tight supply
and downside risks to oil demand from a slowing economy, with
geopolitical events and speculators driving prices in the
near-term, analysts said.
"The market is still finding its view on what's going to
happen over the course of the year," said Simon Wardell,
analyst at Global Insight.
U.S. light sweet crude oil <CLc1> rose $1.39, or 1.5
percent, to $94.08 per barrel.
(Additional reporting by Jennifer Coogan, Chris Reese and Nick
Olivari in New York and Jeremy Gaunt, Santosh Menon and Atul
Prakash in London)
(Editing by Richard Satran)
