MARKETS GLOBAL-Shares retreat on consumer sentiment, yen falls

Fri Jan 18, 2013 5:46pm GMT

* MSCI world share index retreats from highest since May
2011
    * Wall Street stocks falter after dip in U.S. consumer
sentiment
    * China growth data initially boosts global recovery outlook
    * Japan's yen hits new lows vs dollar, euro


    By Herbert Lash
    NEW YORK, Jan 18 (Reuters) - World equity markets slipped
from a 20-month high on Friday as Wall Street stocks faltered on
a report showing U.S. consumer sentiment at its lowest in over a
year in January, while the yen hit new lows ahead of potential
asset purchases by the Bank of Japan.
    Global shares retreated from earlier gains sparked by data
showing economic momentum picking up in China and the United
States. But a disappointing earnings outlook from chipmaker
Intel helped push U.S. stocks lower, even as General Electric Co
 reported a better-than-expected 7.5 percent rise in
fourth-quarter profit and a sharp increase in its backlog of
equipment orders. 
    The Thomson Reuters/University of Michigan's preliminary
reading on the overall index on consumer sentiment came in at
71.3, down from 72.9 the month before. The index was at its
lowest since December 2011. 
    "It's a disappointing figure and helped put pressure on
risky assets," said Greg Moore, a currency strategist at TD
Securities in Toronto.
    "Markets for the last two weeks have been grinding higher,
without much fundamentals backing it up. So this is a reality
check. But it's still fairly early in the year and things could
change," he said.
    U.S. Treasury debt prices extended modest gains on news that
U.S. consumer sentiment had deteriorated for a second straight
month in January, contrary to forecasts, with many consumers
citing the recent "fiscal cliff" debate in Washington.
 
    The U.S. benchmark 10-year Treasury note ticked
up 13/32 in price to yield 1.8581 percent.
    Omer Esiner, a chief market analyst at Commonwealth Foreign
Exchange in Washington said the consumer confidence numbers
would be closely scrutinized going given the still uncertain
impact of higher payroll taxes on the consumer.
    "This is a big miss and could mark the beginning of a
downward trend in sentiment and in spending," Esiner said.
    The Dow Jones industrial average was down 18.00
points, or 0.13 percent, at 13,578.02 points. The Standard &
Poor's 500 Index was down 3.95 points, or 0.27 percent,
at 1,476.99. The Nasdaq Composite Index was down 15.25
points, or 0.49 percent, at 3,120.75. 
    Disappointing economic data in the UK helped pushed European
shares downward. The FTSEurofirst 300 index of top
shares closed 0.16 percent lower at 1,163.64.
    China reported that its economy grew at a slightly
faster-than-expected 7.9 percent in the fourth quarter of 2012,
a clear sign it has avoided a sharp economic slowdown, though
the annual growth rate was its weakest in 13 years.
    The China data came on top of strong U.S. labor and housing
market reports on Thursday, providing fresh impetus to a broad
rally in equities, precious metals and commodities since the
start of the year. 
    MSCI's index of leading world shares hit its
highest level since May 2011 at 351.70, but later gave back its
gains to trade down slightly at 350.91.
    Spot gold  was up $1.70 to $1,688.90 an ounce.
    Oil prices stalled at $111 a barrel, retaining most of
Thursday's gain, supported by the stronger growth in China and
supply concerns after U.N. talks with Iran failed and as
Algeria's hostage crisis continued.
    Brent crude briefly edged higher after the United Nations
said nuclear inspectors had failed to reach a deal with Iran to
unblock an investigation into suspected bomb research after two
days of intensive discussions. 
    Brent crude rose 10 cents at $110.20 barrel, while
U.S. oil was down 34 cents at $95.15 a barrel. 
    Sources familiar with the BOJ's thinking told Reuters the
central bank, under relentless pressure from Japan's Prime
Minister Shinzo Abe, will consider making an open-ended
commitment to buy assets until 2 percent inflation is in sight.
 
    "This is a big deal," said Jens Nordvig, global head of
currency strategy at Nomura Securities in New York.
    "But as always from a trading perspective, it matters
greatly what is already priced," he added.
    The euro last traded 0.5 percent lower against the yen
 at 119.66 yen, down from 120.70 earlier - its highest
since May 2011.
    The euro was also down against the dollar, falling 0.5
percent on the day to $1.3308.
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