US markets slip despite commodity rises

The leading US stock indices have moved gingerly downwards after stronger commodity prices and some bargain-hunting failed to offset growth worries.

US markets opened lower after further FTSE falls and after a brief bounce higher have tracked European stocks down.

Sentiment has been further hurt by news that JP Morgan’s economists have followed Morgan Stanley's decision yesterday to cut its estimates for US economic growth.

JP Morgan cut its fourth-quarter growth forecast to one per cent, from 2.5 per cent previously, and its first-quarter 2012 growth estimate to 0.5 per cent from 1.5 per cent.

"Declining energy prices should help to cushion some of the weakness in the economy, and the still-low levels of cyclically-sensitive spending could reduce the chances of getting a negative GDP quarter.

"Nonetheless, the risks of a recession are clearly elevated," its analysts said in a research note.

A rally by the euro against the dollar and a bounce in commodity prices as the dollar weakened have prevented further US market falls though.

The dollar has hit an all-time low against the Japanese yen after a Wall Street Journal report quoted Japan's top currency official as saying that Japanese authorities do not plan to intervene in the market often.

US crude prices sharply recovered from a three per cent decline earlier to gain one per cent and sugar and coffee futures have also risen.

The materials sector of the S&P 500 gained 1.6 per cent while energy stocks added 1.3 percent.

But stocks continue to fall as confidence remains week.

The Dow Jones industrial average is down 0.7 per cent; the S&P 500 Index is down or 0.5 per cent and the Nasdaq Composite Index is down 0.1 per cent.