NEW YORK, Oct 23, (Agencies): Stocks retreated Friday after forecasts from railroads stirred unease about the US economy and a slide in oil hit energy stocks. Downbeat comments from the leaders of major railroads raised some worries over how long it would take for a recovery to take hold. Union Pacific’s CEO Jim Young said he expects the economy to “limp along” until unemployment starts to fall. Burlington Northern also issued a tepid forecast. Railroads are seen as an early indicator of economic activity because of the key role they play in shipping goods to manufacturers and markets. Meanwhile, oil fell 93 cents to $80.26 a barrel. That dragged energy shares lower. Investors looked past a sharp rise in home sales and strong profits at key technology companies as traders found little reason to buy into the market after a strong rally on Thursday. A big jump in sales of existing homes last month was seen as an aberration. The National Association of Realtors said sales rose 9.4 percent, nearly double the advance that had been expected. It was the highest level in more than two years as buyers raced to complete purchases before a tax credit expires at the end of November. Profits at Amazon.com and Microsoft sailed past expectations and helped lift the tech-heavy Nasdaq composite index. A poor outlook and sharp profit drop from chipmaker Broadcom Corp. late Thursday dented some of the enthusiasm over Amazon and Microsoft. Linda Duessel, equity market strategist at Federated Investors, didn’t see a cause for worry in the downturn, saying the market needed to pause after the massive surge it has made over the past seven months. The Standard & Poor’s 500 index is up 61.6 percent from a 12-year low in March. “The run-up has been too fast,” she said. “You need to consolidate.” In midday trading, the Dow Jones industrial average fell 64.77, or 0.6 percent, to 10,016.54. The S&P 500 index fell 7.91, or 0.7 percent, to 1,085.00. The Nasdaq composite index rose 2.65, or 0.1 percent, to 2,167.94. Stocks had posted big gains Thursday, sending the Dow up 132 points. Investors snapped up financial shares after several banks said they weren’t seeing as many loans go bad. The market also extended its gains after Wal-Mart Stores Inc. said it expects sales to grow this year and increase at a faster pace next year. Bond prices fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.48 percent from 3.42 percent late Thursday. The dollar mostly rose against other major currencies. Gold also rose. Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 496.2 million shares compared with 524.2 million shares traded at the same point Thursday. Europe European shares closed lower on Friday, dragged down by oil stocks tracking a fall in crude prices on economic recovery concerns and the drugmaking sector. The pan-European FTSEurofirst 300 index of top shares closed down 0.6 percent at 1,008.88 points after trading as high as 1,027.89 points earlier in the day. The index, which fell 45 percent in 2008, is up 21 percent this year and has gained almost 56 percent from a record low hit in March. “We are back to a situation where the markets have rallied quite strongly. We have had a interesting week of both good and bad news. I just think this is profit taking,” said Howard Wheeldon, strategist at BGC Partners. Oil stocks reversed early gains as crude fell 0.6 percent after scepticism that the economic recovery was robust enough to spur a convincing rise in fuel demand quelled the appetite to extend this week’s powerful rally. Galp Energia, Petroplus, Royal Dutch Shell and Total were down 0.4 to 1.6 percent. Drugmakers featured among the worst performers. Elan slumped 20 percent after European regulators said they have begun a review of the multiple sclerosis drug Tysabri following reports of 23 cases of a potentially deadly brain infection. GlaxoSmithKline, Roche and Merck were down 0.6 to 1.1 percent. On the upside, miners were the top performers tracking metal prices higher, with copper up 0.5 percent. UK Britain’s top share index shrugged off a shock fall in UK GDP to close higher on Friday, buoyed by miners and banking stocks, and supported by robust earnings and economic news from the US. The FTSE 100 closed up 35.21 points, or 0.7 percent at 5,242.57, having touched a 13-month high of 5,299.57 earlier in the session. It ended 1 percent lower on Thursday. “We had the rather disappointing GDP figures come in, but I think traders are taking it that the figures give a better opportunity for the Bank of England to extend its QE programme,” said Keith Bowman, analyst at Hargreaves Lansdown. Britain’s economy contracted in the third quarter of this year, quashing hopes the downturn was ending and instead marking the longest recession on record. But the UK’s blue-chip index showed limited reaction, paring gains slightly before recovering quickly to levels seen before the data, though the pound fell sharply and European stocks lost ground. Banks gained, with investor sentiment also helped as Microsoft Corp’s results smashed Wall Street expectations, and as sales of previously owned US homes surged to their highest level in over two years in September. Heavyweight HSBC rose 1.2 percent, while Standard Chartered, Barclays and Royal Bank of Scotland added 0.7 to 3.5 percent. Lloyds Banking Group put on 1.5 percent. The real estate arm of insurer Legal & General is in talks to cherry-pick troubled assets from Lloyds Banking Group in deals that could generate millions of pounds for the lender, sources close to discussions told Reuters. Asia Asian stock markets rose Friday, spurred by another batch of optimistic quarterly reports from major companies in the US and Asia even as worries remained that this year’s rally has overshot reality. The region’s broad advance followed an overnight rise on Wall Street, where investors were heartened by stronger profits and upbeat outlooks from companies seen as bellwethers of consumer demand in an economy emerging from recession. The string of encouraging quarterly results continued in Asia, with South Korean auto maker Kia Motors Corp and chip maker Hynix Semiconductor Inc. reporting higher profits that suggested global demand was turning for the better. Oil prices, meanwhile, rose to near $82 on hopes the global economic recovery is gathering pace. The dollar rose modestly against the yen and fell slightly versus the euro in the aftermath of a weekslong drop. Japan’s Nikkei 225 stock average was up 48.69, or 0.5 percent, at 10,315.86 and Hong Kong’s Hang Seng jumped 327.42, or 1.5 percent, to 22,537.94. South Korea’s Kospi advanced 0.7 percent to 1,641.03, while China’s Shanghai index climbed 2.3 percent. Global stock markets have rocketed higher since March, lifting benchmarks in the US and Asia to new yearly highs in recent weeks, amid a weakening dollar and massive liquidity. But there are fears markets may have overestimated the strength of recovery. The possibility governments will start withdrawing lavish monetary and fiscal stimulus could also lead investors to rethink the strength of the rally. “People are still somewhat jittery,” said Song Seng Wun, an economist at CIMB-GK research in Singapore. “The market has done relatively well. The question is how much has been priced in.” “There’s still concern about the potential drag of the US, inflation and the weaker dollar ... And there are signs governments may pull some of the liquidity. And that won’t be so great news for equities,” Song said. Elsewhere in Asia, Australia’s index gained 1 percent, Singapore’s market was up 1.3 percent and India’s Sensex climbed 0.9 percent. Oil Oil prices fell on Friday as a stronger US dollar and doubts over the pace of economic recovery halted the commodity’s recent rally. The dollar gained against a basket of other currencies, while the S&P stock index fell more than 1 percent, as weak industrial sector earnings made investors question the pace of an economic recovery. “Oil is holding around $80 but the decline in equities markets and a stronger dollar mean the rally in oil prices has been stalled for now,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. US crude for December delivery settled down 69 cents a barrel at $80.50, while Brent crude dropped 86 cents to $78.65 a barrel by 2:47 pm EDT (1847 GMT). Oil prices had risen to a one-year high of $82 earlier this week, after rallying more than 10 percent in a week. The surging prices coincided with a rise in global stock indices and a weak dollar, which plunged to a 14-month low against a basket of currencies this week. Oil, priced in dollars, remains cheap for holders of foreign currencies and has been moving in an inverse price relation against the dollar. Optimism for an economic recovery spurs investment in traditionally riskier assets like oil and stocks. That has helped crude prices rise even though oil inventories remain well above average levels. “The ‘traditional fundamentals’ are improving, but only slowly,” according to a Friday research note from Deutsche Bank global oil economist Adam Sieminski. Disappointing third-quarter earnings from industrial companies such as oil field services giant Schlumberger and chip-maker Broadcom Corp triggered uncertainty about the pace of economic recovery, sending US stocks lower. The dollar firmed against sterling after data on Friday showed Britain’s economy unexpectedly shrank by 0.4 percent in the third quarter, roiling economist expectations for a return to growth from the worst recession in decades. Currencies The pound slumped on Friday after shock data showed that Britain was still mired in a deep recession in the third quarter while the euro held firm against the dollar, dealers said. They said sterling was the feature of the day after the British economy contracted 0.4 percent in the third quarter, confounding forecasts for a return to growth of 0.2 percent after five negative quarters. Britain had been expected to follow France and Germany out of recession after they posted growth in the second quarter but the country now looks to be in deep trouble, having to face a soaring public deficit at the same time. In late London trade, sterling tumbled to $1.6334 from $1.6619 in New York late on Thursday after the gross domestic product (GDP) figures. The euro jumped to £0.9194 from £0.9041. The singe European currency was also at $1.5035, up $1.5027 while the dollar rose to 91.94 yen from 91.28 yen. In London on Friday, the euro was changing hands at $1.5035 against $1.5027 late on Thursday, at 138.05 yen (137.20), £0.9193 (0.9041) and 1.5136 Swiss francs (1.5099). The dollar stood at 91.94 yen (91.28) and 1.0079 Swiss francs (1.0040). Gold The pound was at $1.6334 (1.6619). On the London Bullion Market, the price of gold rose to $1,061.75 an ounce from $1,053 an ounce late on Thursday.

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