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While you were sleeping: Down and then up

Tuesday 20th April 2010

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Shares generally fell in Europe and while they opened lower in New York, investors pushed prices higher as they shifted their attention to the prospect of better quarterly results from companies this week.

Gains on Wall Street were being firmly checked by the implications of the decision by the Securities and Exchange Commission to charge Goldman Sachs Group with fraud. There was a report that the decision to proceed with the charges was split, 3 to 2, and it was divided along US political party lines.

A separate report said the bond trader at the centre of the fraud allegations had decided to take some time off work.

Goldman is poised to report earnings tomorrow, which some reports have suggested will be stunning.

In late trading, the Dow Jones Industrial Average was up 0.6% and the Standard & Poor’s 500 Index added 0.37%. The Nasdaq Composite slipped 0.15%.

Among the active stocks were Citigroup Inc, which reported first-quarter earnings more than doubled. Ford Motor Co advanced after Daimler AG reported better than expected results.

Shares in IBM rose ahead of its results, expected shortly after the closing bell.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 2.7% to 17.87.

The Stoxx Europe 600 Index slid 0.7% to 266.13 - its lowest close this month, according to Bloomberg.

National benchmark indexes fell in all 18 western European markets today, except Iceland. Germany’s DAX and the UK’s FTSE 100 both lost 0.3%, while France’s CAC 40 slipped 0.4%.

Among the most actives were UBS AG, Air France-KLM Group,  Ryanair Holdings Plc, Air France, Groupe Eurotunnel SA and Royal Philips Electronics NV.

“The market was looking a little overbought so it doesn’t take a lot” for investors to find an excuse to sell,” Kevin Lilley, who helps oversee about US$2 billion at Royal London Asset Management in London, told Bloomberg News.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.39% to 80.50.

In afternoon New York trading, the euro traded down 0.2% at US$1.3475.

The euro zone currency also earlier fell as low as 123.18 yen, its lowest in about three weeks, before recovering to trade flat at 124.44 yen. Traders told Reuters that the 61.8% retracement of the February to April rally was the next support level at 122.75 yen.

Against the yen, the dollar rose 0.2% to 92.37. Technical analysts saw the next support at the 200-day moving average at around 91.35.

The benchmark 10-year U.S. Treasury note was down 3/32 in price to yield 3.78%.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, slid 1.11% to 273.23.

Most commodities sank including gold, oil and copper in the wake of the Goldman news. Goldman is a leading commodities player.

Spot gold hit a two-week low of US$1,123.15 and was bid at US$1,134 an ounce at 1457 GMT, against US$1,136.45 late in New York on Friday.

US crude for May delivery fell US$1.79 to settle at US$81.45 a barrel. Earlier, US oil touched US$80.53, the lowest intraday price since March 29. Crude briefly broke below the 50-day moving average and saw its biggest three-day loss since February 3-5, Reuters reported.

Brent crude prices for June fell US$1.76 to US$84.23.

Copper for May delivery on the New York Mercantile Exchange's COMEX division fell 1.75 cents to US$3.497 a pound.

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