US stocks slipped and bonds edged up today as investors feared where fallout from credit market turmoil may show up next, even after a series of central bank cash injections into the banking system.
Wall Street followed other global equity markets higher throughout most of the day, but late-afternoon selling dragged financial sector shares lower.
The European Central Bank, the US Federal Reserve and authorities in Asia carried on a global campaign for a third day to prevent money markets from seizing up after the recent revelations by financial institutions of their exposure to the deteriorating US sub-prime mortgage industry and tightening credit markets.
US stocks initially drew strength from news that investment bank Goldman Sachs Group Inc. and outside investors will pump $3 billion into a hedge fund that had been hammered by recent market turmoil. The move was in contrast to other major banks, which recently shut funds.
Major US indices slashed their gains as investors succumbed to the fear of what might be around the corner.
The Dow Jones industrial average finished down 3.01 points, or 0.02 per cent, at 13,236.53. The Standard & Poor's 500 Index fell 0.72 points, or 0.05 per cent, to 1,452.92. The Nasdaq Composite Index slipped 2.65 points, or 0.10 per cent, at 2,542.24.
Europe's FTSEurofirst 300 index finished up 33.87 points, or 2.3 per cent higher, rebounding from a nearly 5 per cent sell-off during the last two sessions.
In Asia, Tokyo stocks ended up 0.2 per cent, while Hong Kong stocks finished 0.45 per cent higher.
While the central bank moves raised concerns that the liquidity problem was far more serious than had been expected, they helped calm tensions and shift investor focus back to strong corporate and economic fundamentals.
Still, fears of a sudden surge in volatility pervaded markets and helped lift US Treasuries.
The euro also came under pressure as investors began to lower their expectations for a rate hike in September from the European Central Bank in the face of turbulent credit markets.
The euro was down 0.5 per cent against the dollar at $1.3623, after touching a one-month low near $1.3600. Against the yen, the dollar slipped 0.15 perc ent to 118.20 yen.