(Updates with midday prices in New York, adds comments, changes
byline and changes dateline, previous LONDON)
By Vivianne Rodrigues
NEW YORK, Dec 27 (Reuters) - Gold and government bond prices rose
while U.S. stocks slid on Thursday as news of the assassination of
Pakistani opposition leader Benazir Bhutto, combined with mostly weak
U.S. economic data, increased investors' demand for safe-haven
assets.
Some analysts said the shock of the Bhutto news triggered a
classic flight of capital to assets deemed as safe havens in times of
geopolitical stress. Bhutto's death at a political rally in
Rawalpindi could spark regional instability and civil unrest within
Pakistan. For more, see [ID:nISL309647].
Gold <XAU=> rallied to a one-month high, up $6.35, or about 0.7
percent, at $830.65 an ounce.
The benchmark 10-year U.S. Treasury note <US10YT=RR> shot up
14/32 in price, with its yield at 4.23 percent, down from 4.28
percent late on Wednesday. Euro-zone government bond prices also rose
after the Bhutto news and a stream of U.S. data, paring earlier
losses to standing slightly down on the day.
U.S. crude oil futures soared above $97 a barrel after the latest
government inventory data showed a steep drop in crude stockpiles,
while stocks sold off sharply and the dollar sank against the euro.
New orders for U.S. durable goods, which are long-lasting
U.S.-made manufactured goods such as cars, refrigerators and washing
machines, rose by a much less-than-expected 0.1 percent during
November.
In contrast, an index of U.S. consumer confidence unexpectedly
rose in December, and as a result, U.S. Treasury bonds pared some
gains from the morning's highs.
"Durable goods was weak and set the market off to a weak footing.
But it was the unfortunate death of Benazir Bhutto in Pakistan that
grabbed the headlines. That's a global stability story," said Peter
Kenny, managing director at Knight Equity Markets in Jersey City, New
Jersey.
U.S. STOCKS AND DOLLAR TUMBLE
The Dow Jones industrial average <.DJI> was down 144.37 points,
or 1.07 percent, at 13,407.32. The Standard & Poor's 500 Index <.SPX>
was down 14.64 points, or 0.98 percent, at 1,483.02. The Nasdaq
Composite Index <.IXIC> was down 29.92 points, or 1.10 percent, at
2,694.49.
The dollar tumbled against the euro, with Thursday marking its
fifth straight day of decline. Traders said holiday-thinned trade was
exaggerating the moves after Bhutto's assassination and the weak U.S.
economic reports.
UBS AG strategists said in a note to clients that "an easing of
market tension and calmer trading conditions will be needed before
any reversal of today's moves."
The euro rose to a session high around $1.4605 <EUR=>, up 0.8
percent from $1.4492 late on Wednesday. This was the euro's highest
level in nearly two weeks. It was on track for its fifth straight day
of gains versus the greenback. The euro also hit a record high at
73.35 pence <EURGBP=>.
The dollar was down about 0.4 percent at 113.88 yen <JPY=>,
reversing earlier gains that sent it to a seven-week high at 114.65
yen overnight, according to Reuters data. The dollar fell 0.9 percent
to 1.1401 Swiss francs <CHF=>, a two-week low.
OVERSEAS STOCKS MIXED, OIL ABOVE $97
In overseas stock trading, the pan-European FTSEurofirst 300
index <.FTEU3> managed to gain 0.07 percent, or 1.07 points, to
1,509.10, riding the coattails of energy shares, which were boosted
by the jump in crude oil prices.
In Tokyo, the benchmark Nikkei average <.N225> inched down 0.6
percent, or 88.85 points, to 15,564.69, as investors took profits on
stocks such as Mitsui Fudosan <8801.T> that had recently rallied.
The Nikkei looked set to end 2007 down almost 10 percent, which
would be its first annual decline in five years and give it the
dubious distinction of being the world's worst-performing major stock
market.
In New York, U.S. crude oil futures for February delivery <CLG8>
advanced $1.33, or about 1.4 percent, to $97.30 a barrel. The news
from Pakistan and the dollar's slide had already lifted oil prices
early in the day, and the U.S. government inventory data released at
mid-morning added to oil futures' gains.
Analysts said oil could make a run toward record highs by the end
of the week. This would put oil closer to the psychologically
significant mark of $100 a barrel.
(Additional reporting by Chris Reese, Kristina Cooke and Steven C.
Johnson, Robert Gibbons and Frank Tang in New York, Anshuman Daga in
London and Aiko Hayashi in Tokyo; Editing by Jan Paschal)
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Keywords: MARKETS GLOBAL