US markets watch dollar's surge

Nzoom-OneBusiness International

US blue-chip stocks eked out slight gains on Friday amid renewed hopes for an economic recovery, while bond prices inched lower after US employment figures hinted at mild improvement in the troubled US labour market.

The dollar vaulted higher, lifted in part by a May US 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 $US31 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 of Oracle's proposed takeover of software rival PeopleSoft.

The broad Standard and 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 US 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 US.unemployment rate rose in May to 6.1%, the highest since July 1994, from April's 6%. But this was in line with Wall Street's expectations.

The blue-chip Dow Jones industrial average rose 21.49 points or 0.24% to finish at 9,062.79, after hitting a session high of 9,215.88.

The Standard and Poor's 500 index fell 2.38 points, or 0.24%, to 987.76, after earlier rising above 1,000 for the first time in about a year.

The tech-driven Nasdaq Composite Index closed down 18.59 points, or 1.13%, at 1,627.42.

Currency and commodities

The euro slumped to a session low of $US1.1686, a loss of more than 1 percent, before climbing back to $US1.1701 at the close of US currency trading. That was below the euro's late Thursday level of $US1.1841 in New York.

The dollar surged to a session high of 118.92 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 $US364.50 an ounce.

On the New York Mercantile Exchange, July crude oil jumped 54 cents to settle at $US31.28 a barrel, hitting its highest price since March 19.

Overseas, the FTSE Eurotop 300 index of pan-European blue-chip shares closed up 2.24% at 856.24. The Nikkei average ended 1.49% up at 8,785.87, its highest close since January 23.