Treasuries rise and dollar down on economic worries

By Herbert Lash

NEW YORK (Reuters) - U.S. Treasury debt prices rose and the dollar slipped on Tuesday as data showing another slide in U.S. home prices along with a plunge in consumer confidence to five-year lows renewed the flight to safe-haven investments.

Gold finished nearly 2 percent higher, rebounding from a recent sharp decline, as funds poured into commodities after the dollar slumped broadly on the weak U.S. economic data.

Oil prices rose slightly to snap three days of losses, on the dollar weakness and fresh output disruptions in Africa spurred buying.

In the stock market, the Dow fell as a rise in shares of miners and other commodities-based companies was offset by a drop in financial shares after a rating downgrade of Bank of America Corp (BAC.N), on expected fallout from the bursting housing bubble, took a toll. But the Nasdaq and S&P 500 rose.

In Europe, stocks closed higher as Nokia, the world's top cell phone maker, said it had not felt much impact from the U.S. economic slowdown, as markets reopened after a four-day holiday weekend. Banks posted strong gains in an echo of Monday's Wall Street sentiment as JPMorgan's sweetened bid for investment bank Bear Stearns reduced fears of a collapse in the financial sector.

"Commodities are up today and that's kind of easing fears of a commodity blow-up," said Cleveland Rueckert, an analyst with Birinyi Associates Inc in Stamford, Connecticut. "A lot of the bad news is now priced into the market and people are starting look further down the road."

In New York, the rise in the price of gold and other metals drove up shares of aluminium producer Alcoa Inc (AA.N) about 2 percent and shares of Freeport-McMoran Copper & Gold Inc (FCX.N) about 4 percent.

But two reports on Tuesday showing further drops in U.S. home prices renewed concerns about the U.S. consumer and the economy's slowdown. The bearish data helped revive U.S. Treasury debt prices.