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Budget deficit worries spark stock indexes to fall in the United States

STOCKS in the United States fell for a fourth day last Friday on persistent worries about the budget deficit, with US Treasuries and the dollar losing ground.

Shares of big manufacturers such as Caterpillar Inc, down 3.5 percent at US$34.31, and financials such as Bank of America, down 3 percent at US$11.07, led the decline. Investors have reduced positions in US assets due to concerns about the nation's debt.

However, multinationals and commodity companies limited the major US stock indexes' losses as investors bought stocks in sectors that could benefit from the weaker US dollar, while energy shares climbed on bets overseas demand would support energy prices.

McDonald's Corp, the largest fast-food restaurant chain, shot up 2.5 percent to US$57.08 and provided the biggest boost to the Dow Jones industrial average.

Shares of gold producer Newmont Mining Corp rose 0.9 percent to US$47.04.

Gold, a traditional safe haven, hit a two-month high, rising above US$960 an ounce for the first time since late March, while the Chicago Board Options Exchange Volatility Index, also known as Wall Street's fear gauge, climbed 4.1 percent and remained well above 30, a key psychological level, according to analysts.

"Investors are coming to a realization that interest rates are heading higher and the dollar is going to be under pressure," said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.

The Dow Jones industrial average dropped 14.81 points, or 0.18 percent, to 8,277.32. The Standard & Poor's 500 Index fell 1.33 points, or 0.15 percent, to 887.00. The Nasdaq Composite Index lost 3.24 points, or 0.19 percent, to 1,692.01.

For the week, though, stocks finished moderately higher, with the blue-chip Dow average up 0.1 percent, the S&P 500 up 0.5 percent and the Nasdaq up 0.7 percent.

Shares of Exxon Mobil Corp climbed 0.6 percent to US$68.83, supported by oil prices continuing to rise above US$61 per barrel.

US crude futures rose 62 US cents, or 1.02 percent, to settle at US$61.67 a barrel on the New York Mercantile Exchange.

On the Nasdaq, big-cap technology shares led the index lower. Apple Inc fell 1.4 percent to US$122.50 and Qualcomm Inc slid 0.9 percent to US$41.31.

Ratings agency Standard & Poor's rattled markets on Thursday when it said that it might cut Britain's AAA credit rating because of the danger of soaring government debt.

The move sparked fears of a similar action against the United States.


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