US fiscal deadlock, data dent stocks; euro hits 5-week high

Brent oil holds steady; gold flat

NEW YORK, Nov 30, (Agencies): Major stock indexes and Treasury yields fell on Friday as concern about the stalemate in crucial US budget talks added to worries about slowing economic growth in the world’s largest economy, though the euro rose on the European outlook.

Adding to global fears were weak data reports from Brazil and Canada.

The euro did fall to session lows against the dollar after data on US consumer spending and income fell short of expectations, though it later recovered as investors focused on a better outlook for Europe after a deal between Greece and international lenders earlier in the week.

World and European stocks edged lower. The MSCI world equity index was down 0.05 percent at 332.18, though it was still near its highest level for November, having added almost 1 percent on Thursday.

The FTSEurofirst 300 index of top European shares slipped 0.2 percent to 1,119.36, following Thursday’s 1.1 percent gain, which took it to a four-month closing high.

Still, European shares are on course for their best month since August and a sixth straight monthly gain as sentiment over the outlook for Europe has improved since a deal was reached on aid to Greece earlier this week.

Those signs have also helped the euro, which was up 0.2 percent against the dollar to $1.3002 after climbing to a five-week high. The single currency touched a seven-month high against the yen. The US fiscal crisis remains the center of focus in oil markets due to its potential impact on demand from the world’s biggest consumer. Crude was up ahead of the weekend.

Brent crude rose 0.1 percent to $110.87 a barrel, while US crude rose 0.5 percent to $88.56 a barrel.

Gold fell to $1,713.66 an ounce, buffeted by uncertainty over the US budget crisis.

US

US stocks dipped on Friday as President Barack Obama and top Republicans remained at odds about how to avert a series of tax hikes and spending cuts next year that could push the economy into recession.

Trading has been choppy as investors react to a barrage of mixed statements from policymakers on the state of discussions about how to avoid going over the “fiscal cliff.”

The market, however, has remained resilient, with the benchmark S&P 500 set to finish the month almost flat as many investors are betting that a deal will be struck - if only at the zero hour.

“There is no sign of it from the rhetoric, but there are expectations it will happen,” said Steve Goldman, principal at Goldman Management in Short Hills, New Jersey. “The rhetoric will get worse before it gets better.”

Corporations still anticipate a harsher tax regime next year. Whole Foods Market Inc was the latest to announce a special cash dividend of $2.00 per share to skirt higher dividend tax rates in 2013. The stock was up 0.5 percent at $93.51.

The Dow Jones industrial average dropped 14.56 points, or 0.11 percent, to 13,007.26. The Standard & Poor’s 500 Index fell 2.17 points, or 0.15 percent, to 1,413.78. The Nasdaq Composite Index lost 6.66 points, or 0.22 percent, to 3,005.37.

The S&P 500 was on track to end the month up about 0.1 pct, or nearly flat, after declining almost 2 percent in October. The index has recovered 4.5 percent since shedding 8 percent following the US presidential election earlier in November.

“The correction from the S&P 500’s September peak has allowed overbought momentum and optimistic sentiment conditions to recede, and we believe the index is closer to an intermediate-term buy signal than a sell signal,” said Ari Wald, an analyst at PrinceRidge Group.

Yum Brands Inc shares slid 9.2 percent to $67.59. The company said late Thursday it expects a drop in fourthquarter sales at established restaurants in China, where a cooling economy is making it difficult to exceed the 21 percent gain it enjoyed there a year earlier.

After a close relationship for several years, Facebook Inc and Zynga Inc revised terms of a partnership agreement, according to regulatory filings on Thursday. Under the new pact, Zynga, creator of the “Farmville” game, will have limited ability to promote its site on Facebook.

Zynga’s stock dropped 6.5 percent to $2.45. Facebook’s stock slipped 0.2 percent to $27.26.

The markets’ reaction to data on Friday was muted.

Europe

Europe’s main stock markets mostly slid on Friday, with persistent concerns over the US “fiscal cliff” offsetting the German parliament’s approval of the latest instalment of aid for Greece.

London’s FTSE 100 index of leading companies slid 0.06 percent to 5,866.82 points and in Paris the CAC 40 dropped 0.33 percent to 3,557.28 points.

In Frankfurt, the DAX 30 managed to eke out a 0.06 percent gain to 7,405.5 points, while In Madrid, the Ibex 35 index fell 0.49 percent to 7,934.6 points with shares in bailed-out Bankia plunging by over 25 percent amid concerns over its restructuring.

UK

Britain’s top share index was modestly lower on Friday, volatile on the last day of the month, mirroring its November performance as US budget concerns dominated.

The FTSE 100 closed down 3.48 points, or 0.1 percent at 5,866.82, dropping back late on after hitting a 6-week high above the 5,900 level earlier in the session. Profit-taking in heavyweight mining stocks after recent strong gains was the main factor dragging the UK blue chips lower late on.

The UK blue-chip index still ended 1.5 percent higher for November, notching up a sixth consecutive monthly gain, albeit having swung through a near 200point range during the month.

Index provider FTSE said the last time the index rose consecutively for 6 months or more, was over the 6 months to November 2005.

The index hit a low of 5,605 on Nov 16 after US election results raised concerns about an impending “fiscal cliff”.

The FTSE 100 tracked falls on Wall Street on Friday, with US blue chips down 0.2 percent by London’s close, awaiting more news on talks to close the budget gap.

Asia

Asian markets mostly climbed on Friday after data showed the US economy grew more than first expected in the third quarter while traders remain upbeat a deal will be made on averting the fiscal cliff. The yen eased further against the dollar and euro after the Japanese government announced a huge spending spree to kickstart the economy just weeks before a general election.

Tokyo closed 0.48 percent, or 45.13 points, higher at 9,446.01, Sydney ended up 0.63 percent, or 28.3 points, at 4,506.0 but Seoul finished 0.10 percent, or 1.95 points, lower at 1,932.90, reversing early day gains.

Hong Kong closed 0.49 percent higher adding 107.50 points to 22,030.39, while Shanghai was up 0.85 percent, or 16.63 points, at 1,980.12. In other markets: Taipei rose 1.02 percent, or 76.62 points, to 7,580.17.

HTC was up 2.7 percent at Tw$266.0 while TSMC gained 2.28 percent to Tw$98.7.

Kuala Lumpur was up 0.22 percent, or 3.51 points, at 1,610.83.

IHH Healthcare added 3.3 percent to 3.48 ringgit while Axiata Group rose 0.2 percent to 5.92 ringgit.

Bangkok rose 1.10 percent, or 14.47 points, to 1,324.04.

Coal producer Banpu lost 0.75 percent to 395.00 baht while energy giant PTT gained 0.63 percent to 320.00 baht.

Singapore closed 0.80 percent, or 24.05 points, higher at 3,069.95.

Farm commodities supplier Olam, which has come under attack from US research firm Muddy Waters, was up 0.96 percent to Sg$1.575 after falling sharply over the past two weeks.

Mumbai rose 0.88 percent, or 168.99 points, to 19,339.90 points.

Private steel producer Jindal Steel rose 5.39 percent to 402 rupees while staterun oil explorer ONGC rose 4.44 percent to 264.9 rupees.

Manila was closed for a public holiday.

Oil

Brent crude prices hovered near unchanged on Friday in choppy, end-ofmonth trading as investors monitored developments in US budget talks and Middle East tensions continued to support the oil complex.

Brent and US crude remained on pace to post monthly gains, snapping a string of two straight months of decline. US RBOB gasoline and heating oil seesawed as December contracts approached expiration at the end of the session.

Oil futures have been buffeted this week by shifting impressions of negotiations between the US Congress and President Barack Obama on a deal to avert $600 billion of tax increases and spending cuts, the “fiscal cliff”, which investors fear could send the economy back into recession.

But he added: “If the fiscal cliff can be avoided, (oil) prices should increase.”

Oil market participants continue to gauge the potential impact of Egypt’s latest political crisis, which erupted when President Mohamed Mursi gave himself sweeping new powers last week.

Brent January crude was unchanged at $110.76 a barrel at 12:11 pm EST (1711 GMT), having swung from $110.25 to $111.19.

Brent seesawed near the 50-day moving average of $110.57 and the 100-day moving average of $110.87.

US January crude was up 35 cents at $88.42 a barrel, having reached $88.79, stalling just above the 50-day moving average of $88.63. Data on Friday showed US consumer spending fell in October for the first time in five months as personal income remained unchanged, suggesting economic growth could be slower in the fourth quarter.

Currencies

The euro hit a five-week high against the dollar after German lawmakers approved Greece’s debt deal, paving the way for Greece to get its next bailout payment and avoid bankruptcy.

The euro jumped to $1.3002 in afternoon trading from $1.2972 late Thursday. The euro rose as high as $1.3027 earlier, its highest point against the dollar since Oct 23.

The dollar rose to 82.50 Japanese yen from 82.15 yen after Japan approved a $10.7 billion stimulus package.

The dollar was mixed against other currencies. The British pound fell to $1.6028 from $1.6038.

The dollar fell to 0.9265 Swiss franc from 0.9280 Swiss franc. It rose to 99.30 Canadian cents from 99.23 Canadian cents.

Gold

Gold held steady on Friday, on course to post a slight gain for November, but trading conditions were choppy as the market moved in line with stocks and other so-called risk assets, buffeted by uncertainty over talks to avert a US budget crisis.

Spot gold was marginally softer at $1,723.91 an ounce by 1523 GMT, headed for a 1.6 percent weekly drop and a narrow monthly gain of around 0.2 percent. US gold was down 0.19 percent at $1,724.00.