* Wall Street shares retreat from 5-year high
* Euro rises on bets ECB might leave rates alone
* Oil prices slip with stocks, growth view caps losses
* Dollar pulls back from 2-1/2-year high versus yen
By Richard Leong
NEW YORK, Jan 7 U.S. stock prices receded from
five-year highs on Monday, while the euro rose against the
dollar on bets the European Central Bank might refrain from
signaling more interest rate cuts on Thursday.
The weakness in the equities market, which was stemmed
partly on caution ahead of companies beginning to report on
their fourth-quarter earnings, spurred selling of oil, gold and
other risky investments. This stoked some safety bids for U.S.
and German government debt.
After a jolt of confidence from last week's budget deal in
Washington and encouraging factory data from China, investors
turned their focus to corporate profits in the last three months
of 2012, when growth in American holiday spending and corporate
investments was tepid.
"We have a cautious market entering fourth-quarter earnings
season," said Peter Cardillo, chief market economist at Rockwell
Global Capital in New York. "I think it's going to be a
disappointing one this time around."
The fourth-quarter earnings season kicks off this week.
Earnings are expected to be only slightly better than the
third-quarter's lackluster results and analysts' current
estimates are down sharply from what they were in October.
Uneasiness about corporate profits emerged after data on
Friday showed U.S. employers kept up a modest pace of hiring in
December and the vast services sector expanded.
Hopes for global economic recovery got a boost after the
Basel Committee of banking supervisors agreed to give banks four
more years and greater flexibility than previously envisaged to
build protective cash buffers. That means they can use more of
their reserves to lend and help economies grow.
In midday trading, the Dow Jones industrial average
was down 75.62 points, or 0.56 percent, at 13,359.59. The
Standard & Poor's 500 Index was down 8.39 points, or 0.57
percent, at 1,458.08. The Nasdaq Composite Index was
down 10.19 points, or 0.33 percent, at 3,091.47.
Among the day's biggest movers were Nationstar Mortgage
Holdings, whose shares rose 11 percent to $37.00 each
after Bank of America entered a deal to sell the
servicing rights on over $300 billion of home loans to
Nationstar and Walter Investment Management.
After touching a 22-month peak last week, the FTSE Eurofirst
index of top European shares was down 0.51 percent at
1,161.03, although the region's bank sector as measured by the
STOXX euro zone bank index bucked the market trend,
gaining 1.5 percent on the Basel news on bank capital.
MSCI's broad world equity index fell 0.38
percent but was still not far from an 18-month peak scaled when
investors returned to the market after the immediate U.S. fiscal
crisis was averted by a political deal in Washington.
EURO GAINS BEFORE ECB MEETING
In the currency market, the euro was up 0.26 percent
at $1.3105, erasing early losses. It held above a three-week low
of $1.2998 hit on Friday.
Analysts predicted the single currency would stay around
those levels until after the ECB meeting. Some expect the ECB to
point to the prospect of easier rates early this year,
contrasting with signals from Federal Reserve policymakers that
the U.S. central bank it may pursue less-accommodative policies
in the future.
The Bank of Japan is also expected to take major steps to
stimulate that country's economy later this month as the new
government aims to end deflation and recession.
The greenback weakened against the yen, last down 0.4
percent at 87.80 yen. Last week, the dollar climbed to a 2-1/2-
year high, which some traders reckoned was overdone.
Expectations of less-easy monetary policy from the Fed later
this year mitigated the renewed safe-haven bids for U.S.
government debt. The yield on benchmark Treasury 10-year notes
was 1.90 percent, little changed from Friday after
it ticked up to an eight-month high.
German Bund futures were up 30 basis points at
143.06, rebounding from a session low of 142.79 earlier.
The weakness in stocks dragged oil prices lower, but signs
of improvement in the global economy rekindled bets on higher
energy demand in 2013, paring their early losses
Gold and copper prices, however, were stuck in the red.
Brent crude futures were off 25 cents or 0.22
percent at $111.06 per barrel after rising 0.6 percent last
week, while U.S. oil futures were down 10 cents or 0.11
percent higher at $92.99.
Spot gold was down 0.56 percent at $1,646.94 an
ounce, though above Friday's $1,625.79, its lowest price since
Three-month copper futures in London were down 0.16
percent at $8,072 a tonne after losing nearly 1 percent the