GLOBAL MARKETS-Shares, oil slip as investors await Fed minutes

Wed Feb 20, 2013 6:04pm GMT

* Mixed U.S. housing data dulls stock rally
    * MSCI world share index slips after hitting 4-1/2-year high
    * Oil falls on Saudi move to bolster supplies
    * Dollar edges higher on perceived strength in housing data


    By Herbert Lash
    NEW YORK, Feb 20 (Reuters) - Global equity markets faltered
on Wednesday as a mixed reading of U.S. housing data took the
shine off this year's stock rally, while oil prices fell as the
prospect of increased Saudi supply offset optimism spurred by an
improving worldwide economy.
    An index of world shares rose to a 4-1/2-year high before
turning lower. Investors were cautious ahead of the release of
minutes from the Federal Reserve's most recent meeting later in
the day, which are expected to provide insight into the U.S.
central bank's thinking on policy.
    Global equity markets have surged over the last seven months
as major central banks repeatedly delivered monetary support to
weak economies. But a more than 7 percent rise in the S&P 500,
the U.S. benchmark, so far this year has given investors pause
as to how much further the rally can go.
    "The market seems very tired and listless, and investors are
prone to take profits now as they wait for the music to stop,"
said Matt McCormick, a money manager at Bahl & Gaynor in
Cincinnati.
    Traders also said there were unconfirmed rumors in the
market that a troubled hedge fund was selling assets. 
    "I heard the chatter about a hedge fund liquidating things
today, but how big I don't know. Certainly it sparks concern,"
said Michael James, senior trader at Wedbush Morgan in Los
Angeles.
    MSCI's all-country world equity index rose
to 359.37 points, its highest level since June 2008, before
retreating to trade down 0.17 percent on the day at 357.45.
    Wall Street slipped lower and the FTSEurofirst 300 index
 index of top European shares closed down 0.26 percent
to a 1,168.72. 
    U.S. residential construction fell in January but a jump in
permits for future home building to a 4-1/2-year high offered
hope the housing market recovery remains on track.
 
    The Dow Jones industrial average was down 19.86
points, or 0.14 percent, at 14,015.81. The Standard & Poor's 500
Index was down 6.22 points, or 0.41 percent, at 1,524.72.
The Nasdaq Composite Index was down 18.14 points, or
0.56 percent, at 3,195.46. 
    The Dow edged higher at one point on gains by Boeing Co
, which has found a way to fix battery problems on its
grounded 787 Dreamliner jets, a source familiar with the U.S.
company's plans told Reuters. 
    Boeing shares rose 1.3 percent to 75.62, though the Dow gave
up earlier gains.
    
    European shares fell as surprise dividend cuts by British
insurer RSA and Lufthansa and weak results
from the likes of Accor, Europe's biggest hotelier, and miner
BHP Billiton weighed on sentiment.
    RSA was the biggest single declining stock after it
cut its dividend by a fifth after weak investment returns,
sending its shares down 14.9 percent. 
    Lufthansa, Europe's biggest airline, shed 6.2
percent to close at 15.00 by withholding a dividend for the
second time in three years. 
    Oil prices fell with news on expectations of greater supply
of crude.
    Saudi Arabia, the world's top exporter of crude oil, expects
to raise its output in the second quarter to satisfy higher
demand from China and drive economic recovery elsewhere, oil
industry sources said, but the exact rise in volume was unclear.
 
    April Brent crude futures were down $1.61 at $115.91
a barrel after posting their first gain in four sessions on
Tuesday. U.S. crude fell $1.96 to $94.70. The contract
expires later on Wednesday.
    U.S. Treasury debt prices eased, tracking falls in German
bonds after a weak auction, although the market was seen
range-bound before the release of minutes of the Federal
Reserve's January policy meeting later in the day.
    The benchmark 10-year U.S. Treasury note was up
3/32 in price to yield 2.0173 percent.
    The dollar edged higher against the yen on the perception
the data showed an overall improvement in the U.S. housing
market.
    The housing report's impact on the dollar-yen rate was a bit
of a surprise as it has been driven by Japanese monetary policy
despite major U.S. data over the past few months. 
    The yen gained on Tuesday on a potential rift between
Japanese Prime Minister Shinzo Abe and Finance Minister Taro Aso
with respect to foreign bond purchases. Aso said he was not
considering foreign bond buying, while Abe had indicated buying
was an option.
    The euro trimmed losses against the dollar to trade
0.28 percent lower at $1.3348. 
    Against the yen, the dollar fell as low as 93.11 yen
after Abe's remarks, before recovering to trade at 93.50 yen,
down 0.1 percent on the day, helped largely by the U.S. housing
data.
    The decline in U.S. housing was due to the more volatile
multi-family component, analysts said, while the single-family
category rose to its highest since July 2008.
    "Housing starts may have missed but they are still 
relatively high compared to where we are in the cycle," said
Brian Kim, currency strategist, at RBS Securities in Stamford,
Connecticut. 
    "Overall, I would say, housing starts and building permits
were generally constructive."
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