Stocks fall after housing data

Stocks fall after housing data

	Published : Mon, 27 Aug 2007 15:28 By : Agencies Print this Story

NEW YORK (AP) - Stocks fell moderately in early trading Monday following news that sales of existing homes fell in July for a fifth straight month and that inventories of unsold homes spiked.

A real estate trade group reported that sales of existing homes fell to the slowest pace in nearly five years, while home prices fell for a record 12th straight month. The National Association of Realtors reported that sales of existing homes slipped by 0.2 percent in July to a seasonally adjusted annual rate of 5.75 million units. Inventories rose 5.1 percent to a 9.6 month supply.

Despite signs of continued weakness in the housing market, there still seems to be an appetite for corporate takeovers despite concerns about available credit. On Monday, U.S. Steel Corp. said it will buy Canada's Stelco Inc. for about $1.1 billion; Swiss electrical engineer ABB Ltd. said it will sell its oil and gas production plant to Chicago Bridge & Iron NV for $950 million; and Taiwanese computer vendor Acer Inc. said it will acquire U.S. computer maker Gateway Inc. for $710 million.

But it's possible that the huge buyout sums seen earlier in the year, which drove the Dow Jones industrial average to record highs last month, might slip as debt becomes more difficult to take on. The Home Depot Inc. has tentatively agreed to sell its wholesale distribution business to private equity firms for $8.5 billion, a person with direct knowledge of the situation said Sunday, which is $1.8 billion less than originally planned. The deal includes Home Depot guaranteeing $1 billion of the debt the buyers will take on to complete the transaction.

In the first hour of trading, the Dow fell 63.00, or 0.47 percent, to 13,315.87.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 7.98, or 0.54 percent, to 1,471.39, and the Nasdaq composite index fell 11.97, or 0.46 percent, to 2,564.72.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.61 percent from 4.62 percent late Friday.

Last week was a strong one for the markets following weeks of volatility due to worries about credit shrinking to the point where it pinches economic and corporate growth. The Dow finished up 2.29 percent for the week, the Standard & Poor's 500 index advanced 2.31 percent, and the Nasdaq composite index jumped 2.86 percent.

Home Depot shares rose 81 cents, or 2.3 percent, to $35.49 on the tentative deal with a buyer group that includes Bain Capital Partners, Carlyle Group and Clayton, Dubilier & Rice.

Gateway surged 60 cents, or 50 percent, to $1.81 after news it was being acquired by Acer.

In other takeover news, global mining company Rio Tinto Ltd. said it won U.S. antitrust approval for its $38.1 billion buy of Canadian aluminum producer Alcan Inc. Rio Tinto rose $1.47 to $275.49, while Alcan rose 55 cents to $97.97.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell 74 cents to $70.35 per barrel on the New York Stock Exchange.

The Russell 2000 index of smaller companies fell 6.84, or 0.86 percent, to 792.09.

In Asian trading, Japan's Nikkei stock average rose 0.32 percent, while China's Shanghai Composite Index, which hit record closes every day last week, gained 0.8 percent to another all-time high.

In afternoon trading in Europe, Germany's DAX index rose 0.37 percent, and France's CAC-40 rose 0.20 percent. Markets in the United Kingdom were closed for a summer bank holiday.