Shares steady after rally, dollar jumps

Thu Jan 3, 2013 1:06pm EST
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By Rodrigo Campos

NEW YORK (Reuters) - World stocks stalled on Thursday as traders were cautious after equities hit an 18-month high, while the U.S. dollar climbed to a three-week high against a basket of currencies on concerns about more budget wrangling in Washington.

Data suggesting some momentum in the U.S. economy as the year ended showed private-sector employers stepped up hiring in December, allowing for the upward tick in stocks and further supporting the greenback.

President Barack Obama and congressional Republicans face two more months of tough talks on spending cuts and an increase in the nation's debt limit as the hard-fought deal to avert the "fiscal cliff" of automatic tax hikes and spending cuts covered only taxes and delayed decisions on expenditures until March 1.

"There's still some clouds over the horizon, with the fiscal issue of the government," said Jeff Meyerson, head of trading at Sunrise Securities in New York. "We don't know how they're going to pan out, but in all likelihood there's not going to be a calamity."

The MSCI world equity index .MIWD00000PUS advanced less than 0.1 percent, reversing a dip through most of the session after hitting an 18-month high on Wednesday.

A European equity benchmark .FTEU3 ended up 0.45 percent after hitting its highest intraday level since March 2011, boosted by a belated reaction in Swiss stocks due to a holiday.

The Dow Jones industrial average .DJI was up 7.03 points, or 0.05 percent, at 13,419.58. The Standard & Poor's 500 Index .SPX was up 1.57 points, or 0.11 percent, at 1,463.99. The Nasdaq Composite Index .IXIC was up 2.49 points, or 0.08 percent, at 3,114.75.

The euro tumbled against the dollar as investors grew worried about more budget fights ahead. Analysts say the market could be set up for volatility as Obama and congressional Republicans tussle over the next two months.   Continued...

A trader walks at the Hong Kong Stock Exchange during morning trading December 15, 2011. REUTERS/Tyrone Siu