new York 08 30, 2012, 21:30 IST
Stocks fell on Thursday on uncertainty over the prospect for economic stimulus by the U.S. Federal Reserve while the euro edged up after China voiced some support for the debt-troubled euro zone.
A successful Italian bond sale pointed to growing confidence among investors that the European Central Bank will take measures shortly to tackle more effectively the debt crisis that has plagued the 17-member currency bloc.
Investors waited to see if Fed Chairman Ben Bernanke delivers firmer hints on more monetary easing at a meeting of central bankers in Jackson Hole, Wyoming on Friday.
U.S. and European stocks declined as investors closed out positions ahead of Bernanke's speech, which is expected to provide some clues to the Fed's next move.
"People are taking money off the table ahead of the Fed meeting, but this isn't a panic move as seen by all sectors being impacted about the same," said Jerry Harris, president of asset management at Sterne Agee in Birmingham, Alabama.
"I wouldn't call this a run from risky assets. We were overdue for some profit taking."
All 10 S&P sectors were lower. The cyclical groups, which closely track the pace of economic growth, declined.
The Dow Jones industrial average was down 91.33 points, or 0.70 percent, at 13,016.15. The Standard & Poor's 500 Index <.SPX> was down 9.92 points, or 0.70 percent, at 1,400.57. The Nasdaq Composite Index was down 27.43 points, or 0.89 percent, at 3,053.75.
In Europe, the FTSEurofirst 300 index of top European shares was down 0.6 percent at 1,079.39.
MSCI's all-country world equity index, which has edged down over the past seven sessions, was 0.8 percent lower at 320.73.
Any signal from Bernanke that the U.S. central bank will embark on another asset buying program would weigh broadly on the dollar.
The euro was up 0.2 percent at $1.2501, while the U.S. dollar index was up 0.2 percent at 81.676.
A rise above $1.2590 would mark the euro's strongest level in eight weeks.
Investors and economists have become more skeptical over the past two weeks that the Fed will announce another round of bond buying, or "quantitative easing," at its mid-September meeting, according to Reuters polls during the last week.
"The risk with Jackson Hole is that unless there are further strong signals of more easing, the market will take it as a disappointment," said Christian Lawrence, currency strategist at Rabobank, adding that this would be positive for the dollar.
"The bar is quite high, and if there is any paring back of talk of QE, the market is likely to react more because it is more or less expecting it."
The euro gained some support after Chinese Premier Wen Jiabao, who met German Chancellor Angela Merkel in Beijing on Thursday, said he was confident the euro zone could pull out of its debt crisis and that China would be willing, after a proper risk assessment, to keep buying the region's government debt.
Graphic on metals price: http://link.reuters.com/cag37s
Graphic on central bank balance sheets: http://link.reuters.com/jyh34s
U.S. Treasuries gained in price. Discounting the likelihood of the Fed's launching new stimulus when it meets next month has been the predominant trade in recent weeks despite uncertainty over what debt would be purchased in any new program.
The benchmark 10-year U.S. Treasury note was up 7/32 in price to yield 1.6276 percent.
Growing expectations of a beefed-up bond-buying program from the ECB encouraged solid demand at a sale of 7.3 billion euros of new five- and 10-year Italian sovereign bonds on Thursday.
Oil futures slid below $113 a barrel as investors looked to forthcoming data to shed light on the direction Bernanke might take. The Chicago Purchasing Managers Index and factory orders are due out on Friday and could shed light on the economy of the world's largest crude buyer.
Brent crude for October delivery fell 2 cents to $112.52 a barrel. U.S. crude fell for a second session, down $1.23 to $94.26 a barrel.
