MENAFN - Arab Times
Stocks decline as US aims to avoid 'cliff' dollar edges up
(MENAFN - Arab Times) World stocks and the euro slipped on Friday while US shares fell for a fifth day as the White House and US lawmakers planned to make a late effort to avoid the US "fiscal cliff."
Meanwhile, expectations that Japan will inject new stimulus into its economy pushed the yen to a two-year low for a third straight day.
President Barack Obama and Democratic and Republican lawmakers were scheduled to meet on Friday afternoon as the deadline looms for reaching a budget deal to avert massive tax increases and spending cuts that could drag the economy - and others around the world with it - into recession.
The MSCI all-world share index was down 0.2 percent and the pan-European FTSEurofirst 300 ended down 0.6 percent.
The euro was down 0.1 percent on the day at 1.3221, having slipped to a session low of 1.3164. Traders said it broke below stop-loss sell orders around 1.3170.
An agreement on the US budget would be viewed as positive for riskier currencies such as the euro and Australian dollar, while a deadlock or snags in the negotiations would be deemed positive for the safe-haven and highly liquid dollar.
Brent crude oil held below 111 per barrel, not far off its highest this month.
Brent crude was down 59 cents to 110.21, on course for a weekly gain of about 1.5 percent and a full-year increase of about 3 percent, which would be the smallest in four years.
US crude was down 19 cents to 90.67 and was set for its first yearly loss in four years. In other commodity markets, US gold for February eased 2.00 an ounce to 1,661.70.
US stocks fell on Friday, putting the S&P 500 on track for a fifth straight decline, as President Barack Obama and top congressional leaders were set to make a last-ditch attempt to steer the country away from severe fiscal austerity next year.
Trading was volatile and stocks rebounded from their session lows after unconfirmed reports that President Obama was about to offer a new plan to Republicans.
But investors' pessimism about achieving anything more than a stop-gap deal by the deadline was reflected in the benchmark S&P 500's drop of 1.3 percent so far this week. The broad index was on pace for its worst weekly performance since mid-November.
The Dow Jones industrial average dropped 67.90 points, or 0.52 percent, to 13,028.41. The Standard & Poor's 500 Index fell 6.96 points, or 0.49 percent, to 1,411.14. The Nasdaq Composite Index lost 9.21 points, or 0.31 percent, to 2,976.61.
Highlighting Wall Street's sensitivity to developments in Washington, stocks tumbled slightly more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned that a deal was unlikely before the deadline. But later the indexes rebounded after the US House of Representatives said it would hold an unusual Sunday session to work on a fiscal solution.
With many investors away for the holiday-shortened week, volume is expected to remain light and that could exacerbate the market's swings.
Positive economic data failed to alter the market's downtrend.
Barnes & Noble Inc shares rose 5.7 percent to 15.17 after the top US bookstore chain said British publisher Pearson Plc had agreed to make a strategic investment in its Nook Media subsidiary. But Barnes & Noble also said its Nook business will not meet its previous projection for fiscal year 2013.
Shares of magicJack VocalTec Ltd jumped 11 percent to 18.06 after the company, which provides VoIP or voice over Internet protocol services, forecast more than 39 million in GAAP revenue and over 70 cents per share in operating income for the fourth quarter. The company also said it has appointed Gerald Vento as president and CEO, effective Jan 1.
The US-listed shares of Canadian drugmaker Aeterna Zentaris Inc surged 14.8 percent to 2.49 after the company said it had reached an agreement with the US Food and Drug Administration on a special protocol assessment by the FDA for a Phase 3 registration trial in endometrial cancer with AEZS-108 treatment.
European shares ended the last full trading session of 2012 lower as wavering expectations about the outcome of the US budget crisis left overbought indexes vulnerable to profit taking.
The FTSEurofirst 300 closed down 7.04 points, or 0.6 percent, at 1,130.56 on Friday. The Euro STOXX 50 , whose 14-day relative strength index (RSI) - a widely-used technical momentum indicator - is in 'overbought' territory, fell 1.2 percent.
With markets in Austria, Denmark, Finland, Germany, Italy, Norway, Sweden, and Switzerland now closed for 2012, and any US deal to avoid massive tax hikes and spending cuts still looking some way off, Friday was the last chance for investors to book profits on bumper gains seen over the last six months.
The drawnout negotiations in the United States has contributed to the Euro STOXX 50 posting its first weekly loss in six weeks, but the index is still near 17-month highs.
While cash markets do not appear to fully reflect US risks, investors are snapping up downside protection on equities in the final trading days of 2012, taking the put/call ratio on EuroSTOXX 50 to its highest level in a year.
There were signs elsewhere of worry building with volatility - a crude gauge of investor fear - near five-month highs, and euro zone cash market index volumes in December on track to be the quietest month in six years, according to Thomson Reuters Eikon data.
Every sector on the Stoxx 600 ended in the red with falls led by financials .
Still, the FTSEurofirst 300 is set to post a gain of 14 percent for 2012 while the euro zone's blue chip Euro STOXX 50 index has risen 15 percent.
Both indexes are enjoying their best annual performance since the sharp bounce of 2009 fueled by unparalleled support for the global economy by central banks and expectations that a US deal will be struck.
Britain's benchmark share index had its worst one-day fall in more than a month on Friday on worries over a US budget deadlock, although most traders still expected an eventual U.S deal to push equities up in January.
The blue-chip FTSE 100 closed down 0.5 percent, or 28.93 points lower, at 5,925.37 points, marking its worst intraday fall since losing 0.6 percent on November 26.
Uncertainty over the US budget situation has prevented the FTSE 100 from rising beyond the 6,000 point mark - a level seen by technical traders as key to propelling further moves higher.
However, the FTSE 100 is still up by 6 percent since the start of 2012, although it has underperformed gains of 30 percent on Germany's DAX and a 15 percent rise on France's CAC-40 index.
The outperformance of the German and French markets has been partly driven by a surge in euro zone equities after the European Central Bank pledged new measures to tackle the euro zone's sovereign debt crisis.
Asian shares rose Friday on hopes of a last-minute deal to avert the US fiscal cliff, despite warnings from a leading Democrat that an agreement is unlikely just days before a year-end deadline.
In its last trading day of the year Tokyo's Nikkei climbed 0.70 percent to highs not seen since before last year's March 11 quake-tsunami disaster. The index ended 72.20 points up at 10,395.18. It rose 22.9 percent for the year.
Sydney gained 0.50 percent, or 23.3 points, to close at 4,671.3 and Seoul closed up 0.49 percent, or 9.70 points, to 1,997.05.
Hong Kong added 0.21 percent, or 46.81 points, to end at 22,666.59, while Shanghai put on 1.24 percent, or 27.35 points, to 2,233.25.
In other markets:
n Taipei rose 51.09 points, or 0.67 percent, to 7,699.50.
TSMC was 1.46 percent higher at Tw97.0 while Hon Hai Precision edged down 0.11 percent to Tw88.9.
n Manila added 0.31 percent, or 17.84 points, to close at 5,812.73.
BDO Unibank gained 0.07 percent to 72.80 pesos while SM Investments rose 0.22 percent to 882 pesos.
n Wellington ended 0.38 percent, or 15.46 points, higher at 4,080.90.
n Bangkok fell 0.38 percent or 5.26 points to 1,391.93.
Siam Cement dropped 2.22 percent to 440.00 baht, while telecoms company Advanced Info Service lost 1.42 percent to 209.00 baht.
n Jakarta ended up 34.83 points, or 0.81 percent, at 4,316.68.
Astra Agro Lestari rose 3.14 percent to 19,700 rupiah, Telekomunikasi Indonesia gained 1.12 percent to 9,050 rupiah, while Indocement Tunggal Prakarsa lost 0.88 percent to 22,450 rupiah.
n Singapore closed up 0.25 percent, or 7.87 points to 3,191.80.
Jardine Cycle & Carriage gained 0.50 percent to Sg48.29, while United Overseas Bank shed 0.30 percent to Sg19.82.
n Kuala Lumpur gained 7.17 points, or 0.43 percent, for a record closing high of 1,681.33.
Bumi Armada rose 2.6 percent to 3.90 ringgit while Sime Darby ended up 1.1 percent at 9.49. IHH Healthcare lost 0.9 percent to close at 3.38 ringgit.
Mumbai rose 0.63 percent or 121.04 points at 19,444.84 points.
Suzlon jumped 7.52 percent to 19.3 rupees, Reliance Industries rose 2.73 percent to 840.35 rupees and state-run oil explorer ONGC rose 2.49 percent to 265.85.
Oil prices steadied on Friday as markets awaited an 11th-hour meeting between US President Barack Obama and congressional leaders over a deal to avert next year's "fiscal cliff" of tax hikes and spending cuts.
New York's main contract, light sweet crude for delivery in February, added 10 cents to 90.97 a barrel.
Brent North Sea crude for February dipped eight cents to 110.72 a barrel in London morning deals.
Traders welcomed news of Obama's meeting, which was to take place on Friday after the president cut short his Christmas vacation in Hawaii.
The dollar is rising against the euro as traders wait to see if US lawmakers will reach a budget deal before a deadline at the end of the year.
The euro fell to 1.3220 in afternoon trading from 1.3242 late Friday.
The British pound rose to 1.6163 from 1.6108.
The dollar rose to 86.11 Japanese yen from 86.02 Japanese yen.
The dollar was unchanged at 0.9133 Swiss franc.
Trading was light with many market participants out on vacation between Christmas and New Year's.
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