WRAPUP 1-U.S. blue chips rise on recovery hope, oil jumps

Reuters, 06.06.03, 6:10 PM ET  By Mike Miller NEW YORK, June 6 (Reuters) - U.S. blue-chip stocks eked out slight gains on Friday amid renewed hopes for an economic recovery, while bond prices inched lower after U.S. employment figures hinted at mild improvement in the troubled U.S. labor market. The dollar vaulted higher, lifted in part by a May U.S. jobs report was not as dire as expected and sparked hope that the economy is on the mend. But the greenback's rise sent gold prices lower. In New York, oil prices hit 11-week highs above $31 a barrel as OPEC producers Saudi Arabia and Venezuela sought assurances that nonmember Mexico would follow the cartel in any move to tighten supply. The Nasdaq Composite index finished lower on near-record volume as investors booked profits from a rally on news ofOracle Corp.'s (nasdaq: ORCL - news - people) proposed takeover of software rival PeopleSoft Inc. (nasdaq: ORCL - news - people). The broad Standard & Poor's 500 index also ended Friday's session slightly lower. But all three major stock indexes still managed to end the week higher, marking a second consecutive week of gains. "The most critical piece of news ... is Oracle's bid for PeopleSoft," said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access. "That means Oracle is confident about the economy going forward, and they think earnings are going to hold up." A government report showing U.S. payrolls shrank by only 17,000 jobs in May, a much smaller decline than expected, helped investors' sentiment as the data hinted of improving conditions in the weak labor market. The same report, though, showed the U.S. unemployment rate rose in May to 6.1 percent, the highest since July 1994, from April's 6 percent. But this was in line with Wall Street's expectations. The blue-chip Dow Jones industrial average <.DJI> rose 21.49 points or 0.24 percent to finish at 9,062.79, after hitting a session high of 9,215.88. The Standard & Poor's 500 index <.SPX> fell 2.38 points, or 0.24 percent, to 987.76, after earlier rising above 1,000 for the first time in about a year. The tech-driven Nasdaq Composite Index <.IXIC> closed down 18.59 points, or 1.13 percent, at 1,627.42. For the week, the Dow rose 2.4 percent, the S&P 500 gained 2.51 percent and the Nasdaq advanced 1.97 percent. Since hitting their 2003 lows on March 11, the Dow has risen about 20 percent, the S&P 500 has added about 23 percent, and the Nasdaq has gained about 28 percent. "The correction which has been in the cards for the last number of days has finally gotten under way, with investors using the weekend as an excuse to take some money off the table," said John Simon of TradeSignals.com. Stock trading was heavy, with more than 1.83 billion shares traded on the Big Board and 2.95 billion changing hands on Nasdaq, a record for the year and the fourth-largest daily volume in Nasdaq's history. Tech stocks got a boost earlier from the soaring shares of PeopleSoft, up almost 18 percent, after Oracle, the world's No. 2 software maker, offered to buy PeopleSoft for $5.1 billion. PeopleSoft shares, the most active on Nasdaq, jumped $2.71 to $17.82, while Oracle's stock fell 27 cents to $13.09. In the U.S. Treasury market, the 30-year bond <US30YT=RR> bucked the lower trend in debt markets, climbing 5/32 to 115-17/32, pushing its yield down to 4.40 percent from Thursday's 4.41 percent. The benchmark 10-year note <US10YT=RR> fell 2/32 to 102-09/32, boosting its yield to 3.35 percent from a four-decade low of 3.24 percent reached on Thursday. The euro slumped to a session low of $1.1686 <EUR=>, a loss of more than 1 percent, before climbing back to $1.1701 at the close of U.S. currency trading. That was below the euro's late Thursday level of $1.1841 in New York. The dollar surged to a session high of 118.92 <JPY=> against the Japanese yen, up more than 1 percent, before easing back to 118.69 yen at the close. That was above the dollar's late Thursday level of 117.63 yen in U.S. trading. Gold's tight correlation with the volatile euro has been reliable for days. On the Commodity Exchange in New York, gold for August delivery fell $5 to end at $364.50 an ounce. On the New York Mercantile Exchange, July crude oil jumped 54 cents to settle at $31.28 a barrel, hitting its highest price since March 19. Overseas, the FTSE Eurotop 300 index <.FTEU3> of pan-European blue-chip shares closed up 2.24 percent at 856.24. The Nikkei average <.N225> ended 1.49 percent up at 8,785.87, its highest close since Jan. 23.