U.S. stocks fall on business spending view

By Herbert Lash

NEW YORK (Reuters) - Wall Street stocks fell on Thursday amid concerns that sluggish Oracle revenue suggests slower business spending, but the dollar gained on hopes that results of a Federal Reserve asset swap indicate a stronger-than-expected banking sector.

The Fed swapped $75 billion (37 billion pounds) of U.S. Treasury securities for mortgage-backed assets that have sparked a debilitating credit crisis in an auction aimed at bolstering bank balance sheets.

European shares had gained earlier on renewed central bank efforts to buoy investor sentiment and ease the credit crunch.

Oil rose sharply after a bomb attack on a major Iraqi crude pipeline slashed exports from the country's southern oil port for the first time in years.

U.S. Treasuries prices fell, driven by a perception credit strains might lessen and dull the lure of safe-haven government debt. Treasuries extended losses after tepid demand for the Fed's auction, called a Term Securities Lending Facility.

"That the auction drew less than intense interest may be the good news. It may be that dealers might not be in as dire financial straits as had been perceived," said Ward McCarthy, managing director at Stone & McCarthy Research Associates in Princeton, New Jersey.

U.S. stocks fell in volatile trade as the news from Oracle Corp (ORCL.O: Quote, Profile, Research), a bellwether for the software industry, fuelled a sell-off in the technology sector. Investors fear a widening impact of the housing slump on corporate spending.

Oracle was the biggest drag on both the Nasdaq and the Standard & Poor's 500 Index with a slide of more than 6 percent.