Wall Street slips late as budget worries linger

By Edward Krudy

NEW YORK (Reuters) - Stocks fell for a fourth day on Friday on persistent worries about the U.S. budget deficit, with U.S. Treasuries and the dollar losing ground.

Shares of big manufacturers such as Caterpillar Inc (CAT.N), down 3.5 percent at $34.31, and financials such as Bank of America (BAC.N), down 3 percent at $11.07, led the decline. Investors have reduced positions in U.S. assets due to concerns about the country's debt.

However, multinationals and commodity companies limited the major U.S. stock indexes' losses as investors bought stocks in sectors that could benefit from the weaker dollar, while energy shares climbed on bets overseas demand would support energy prices.

McDonald's Corp (MCD.N), the largest fast-food restaurant chain, shot up 2.5 percent to $57.08 and provided the biggest boost to the Dow Jones industrial average.

Shares of gold producer Newmont Mining Corp (NEM.N) rose 0.9 percent to $47.04.

Gold, a traditional safe haven, hit a fresh two-month high, rising above $960 an ounce for the first time since late March, while the Chicago Board Options Exchange Volatility Index .VIX, also known as Wall Street's fear gauge, climbed 4.1 percent and remained well above 30, a key psychological level, according to analysts.

"Investors are coming to a realization that interest rates are heading higher and the dollar is going to be under pressure," said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.

"Energy is moving as China continues to stockpile and buy all the commodities they can. I think you have that play of a weaker dollar and stronger commodities right now. Multinationals are going to be big plays -- anybody doing anything overseas" will attract attention, he added.