Stocks and the dollar faltered yesterday as investors kept a wary eye on fighting in Baghdad and began looking past the war in Iraq to the shaky US economy and the dismal corporate outlook.
On the foreign exchanges, the dollar wavered, losing about 0.25 per cent against the euro. Oil prices, which have fallen about 30 per cent since the end of February, were flat, as expectations for a swift end to the war were balanced by the possibility of a production cut by OPEC.
The health of the US economy and corporate profits have regained investors' attention with the quarterly earnings season set to pick up steam in mid-April. But investors still scour the latest headlines for hints of market-moving news, such as unconfirmed speculation that Iraqi president Saddam Hussein is dead.
In the US, the blue-chip Dow Jones Industrial Average closed 0.02 per cent at 8,298.92. The broad Standard & Poor's 500 fell 0.47 per cent to 1,382.94.
Meanwhile, Europe's leading shares drew back from three-month highs yesterday, dragged down by weak media, auto and technology stocks such as Britain's WPP, Germany's BMW and Finland's Nokia.
The pullback in equities reopened the door to safe havens. Gold and bond prices both rose.
Strategists said the market was due a bit of a consolidation after surging by one-fifth from last month's six-year lows, while relief about a potentially quick end to the war in Iraq gave way to concerns about a still-dire outlook for company profits.
The FTSE Eurotop 300 index of pan-European blue-chips dropped 1.7 per cent and the DJ Euro Stoxx 50 index fell 1.5 per cent.
But the Irish market, which lagged in Monday's rally, lost just 0.4 per cent in very light volume.
It outperformed the likes of London, which was down by 1.7 per cent amid fears that a weakening global economy was eating into corporate profitability.
Oil prices, which have fallen about 30 per cent since the end of February, were slightly higher as expectations of a swift end to the war competed for attention with a possible output cut from the producers' cartel OPEC.
"The market is supported by this talk that OPEC might cut production," said an IPE Brent broker from the London exchange floor.
In New York, crude oil for May delivery rose 33 cents at $28.29 a barrel. London's May Brent crude was up 22 cents at $24.80 a barrel.
Meanwhile, the dollar wavered against major currencies, trading at $1.0686 against the euro, down slightly from Monday's New York close at $1.0691, and up a touch against the yen at 119.88, compared with 119.69 yen at the previous US close.
US consumer confidence figures showing signs of a recovery in early April failed to have much impact on markets.
