While you were sleeping: Uncertainty sidelines investors

While you were sleeping: Uncertainty sidelines investors

(BusinessDesk) March 24 - Equity investors remained on the sidelines, eyeing another climb in oil prices, a cut to Britain’s economic growth forecast and as Japan’s first official cost estimate of the March 11 disaster ranked it as the world’s most expensive ever.

Closer to home, sales of new U.S. homes dropped to a record in February and prices were the weakest since December 2003.

In afternoon trading on Wall Street, stocks were mixed. The Dow Jones Industrial Average gained 0.25%, the Standard & Poor’s 500 Index was 0.07% weaker and the Nasdaq Composite Index rose 0.07%.

“We need to get good reports that remind everyone that the global economy is still doing OK,” James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, told Bloomberg News.

“News out of Europe raises concern that their crisis won’t go away anytime soon. In addition, you’ve got the Middle East burning and keeping energy prices elevated.”

The Federal Reserve's rejection of a dividend plan by Bank of America weighed on bank stocks.

On Wednesday Britain slashed it economic growth forecast and said inflation would stay above target this year and next. Finance Minister George Osborne said corporation tax would be cut by two percentage points to 26% from April, rather than by the one point originally planned.

A levy on banks would be increased to pay for it.

Osborne lowered his growth forecasts to 1.7% in 2011, and 2.5% in 2012. In November, growth was estimated to be 2.1% this year and 2.6% in 2012.

Sterling was last trading at US$1.6355, 0.1% weaker on the day.

In Portugal, parliament began a key debate on government austerity measures, including cutting pensions and state spending, which opposition parties were expected to reject. Prime Minister Jose Socrates has said he would resign if the plan was defeated.

Socrates has said the plan’s rejection would force Portugal to follow Greece and Ireland and seek an international bailout, which he opposes.

The euro weakened 0.6% to US$1.4110 from a 4-1/2 month high of US$1.4249.

"Euro/dollar will be sensitive to news coming from Portugal and the rising possibility that Prime Minister Socrates is forced to resign," Roberto Mialich, currency strategist at Unicredit in Milan, told Reuters.

European leaders begin a two-day summit on Thursday.

The Stoxx Europe 600 Index ended the day 0.5% higher, having swung between gains and losses at least 20 times, according to Bloomberg News.

Japan estimated the cost of the damage from the earthquake and tsunami could top US$300 billion. The first official estimate since the March 11 disaster covers damage to roads, homes, factories and infrastructure, and ranks it as the world's costliest natural disaster.

Meanwhile, the US became the first country to block some food imports from the disaster zone as concern grew over the risk to food safety of radiation from the damaged Fukushima power plant.

Authorities in Tokyo warned that babies should not be given tap water because of radiation from the crippled nuclear plant. Water at a purification plant for the capital of 13 million people had 210 becquerels of radioactive iodine, more than twice the safety level for infants.

Gold rose, as did shares of Freeport-McMoRan Copper & Gold.

Speaking at a Reuters summit in New York, Freeport-McMoRan chief executive Richard Adkerson said the company had the balance sheet to handle a large acquisition.

Spot gold was bid at US$1,439.44 a troy ounce at 1507 GMT from US$1,429.50 late in New York on Tuesday. Earlier in the day, it rose as high as US$1,440.90.

Spot silver also advanced, rising as high as US$36.85 an ounce, its highest since 1980.

Oil climbed, as the turmoil in the Middle East and North Africa continued to escalate.

Brent crude futures for May delivery were up 35 cents to US$116.05 a barrel by 12.54pm EDT.

U.S. crude futures for May delivery gained US$1.14 to US$106.11 a barrel.

(BusinessDesk)

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