US Market

U.S. stocks fell for a third straight day Thursday as worries persisted over turmoil in Libya and how the resulting surge in oil prices might affect the U.S. economic recovery.

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The Dow Jones Industrial Average, having fallen steeply in the two previous sessions, lost another 64 points, or 0.5%, to 12042, in midday trading. The decline put the measure on pace for its biggest three day drop since mid-August. All but a handful of the Dow's 30 components were in the red, led by a 2.4% drop in Hewlett-Packard and a 2.3% decline in Bank of America. Travelers shed 2%, Wal-Mart Stores declined 2%, and DuPont fell 1.8%.

The Standard & Poor's 500 index shed 0.5% to 1301, with every sector in the red. The energy sector posted the steepest drop, weighed down by refiners. Oil is a refinery's largest cost, so rising crude prices can weigh on profits if refiners aren't able to pass those costs on to customers through higher gasoline or heating oil prices. Tesoro tumbled 5.6%, while Sunoco fell 3.6%. The declines came as crude-oil futures climbed as Libyan rebels controlling large swathes of the country promised an offensive against the capital, Tripoli.

U.S. economic data came in mixed. Initial jobless claims fell more than expected. But while durable-goods orders rose a bigger than expected 2.7% in January after three straight declines, the gain was driven mostly by a surge in demand for airplanes. New orders for non-defense capital goods excluding aircraft declined 6.9% last month. In addition, sales of new homes tumbled last month, reversing most of the previous month's gains as the housing market started off the year on a weak footing. The latest round of U.S. corporate earnings also was mixed. Priceline.com posted a 73% jump in fourth-quarter profit as a jump in international bookings fueled top-line growth and margins surged. The company's core earnings topped analysts' estimates and it gave upbeat guidance.

The stock jumped 8% and helped lift the Nasdaq Composite, which edged up 0.1% to 2726. Target climbed 2.9%. The retailer's fourth-quarter earnings rose 11% as revenue improved. The company also benefited from sharply lower bad debt expense at its credit card arm. General Motors reported $510 million in net income for the fourth quarter, a slimmer than expected profit because of increased spending on new vehicle programs, scaled back production of high-margin trucks and charges attached to last year's initial public offering. Its shares fell 5.4%.

European Market

German stocks led European markets to a lower close Thursday, with RWE AG and Allianz AG losing ground in the wake of results and Porsche Automobil Holding SE falling sharply on worries that its deal with Volkswagen AG will fail. The Stoxx Europe 600 index fell 0.6% to close at 280.56, marking a fifth consecutive daily decline. Weakness in the utility sector weighed on the German DAX 30 index, which fell 0.9% to settle at 7,130.50. Shares of RWE slumped 5.2% after the utility firm said its 2010 net income fell 7.4% and warned that its 2011 operating profit will decline by around 20% compared to 2010. Rival E.On AG fell 1.6%. Away from Frankfurt's main index, shares of Porsche tumbled 10.7% on worries about its pending merger with Volkswagen AG, shares of which dropped 3%.

In Paris, the CAC 40 index fell 0.1% to end at 4,009.64, with losses led by steel tube maker Vallourec SA, which reported results late Wednesday. Vallourec's shares slumped 6.6% after it predicted margin pressure in the first half of the year from a strong increase in costs for raw materials, a jump that it said would only be recovered progressively via sales prices. Shares of Renault SA fell 2.7%. In London, the FTSE 100 index slipped 0.1% to close at 5,919.98. Shares of Royal Bank of Scotland Group PLC fell 3.6% after the bank reported results which were below market expectations. Shares of Essar Energy PLC fell nearly 5%, though other energy-related stocks rose as oil prices spiked. Shares of Cairn Energy PLC rose 2.4%, Tullow Oil PLC added 3% and BG Group PLC climbed 2%. In Istanbul, the IMKB-100 index slumped 3.8%, with investors rattled as Turkey is dependent on foreign oil supplies.

Asian Market

Most Asian stocks fell Thursday on worries that high crude-oil prices driven by the Libyan political crisis would fuel inflation and stifle economic growth. Japan's Nikkei Stock Average fell 1.2%, Hong Kong's Hang Seng index dropped 1.3%, and South Korea's Kospi lost 0.6%. The broad losses came after April Nymex crude-oil futures rose past $100 a barrel for the first time in more than two years late Wednesday on worries about potential disruptions to supplies.

China's Shanghai Composite index rose 0.6%, advancing on the back of oil and coal shares, while Taiwan's Taiex added 0.2% on bargain-buying in some beaten down technology and airline stocks. In Japan, the market continued to push lower, weighed by the Mideast crisis and a stronger yen.

Honda Motor Co. dropped 1.4% and Sony Corp. fell 1.5%. Oil-linked plays supported the market in China. Heavyweight PetroChina Co. rose 0.7%. Coal firms also gained on expectations of higher coal prices on the back of stronger oil prices; China Shenhua Energy Co. added 2.1% and China Coal Energy Co. rose 1.9%. Many Airline stocks continued to drop across the region on worries high fuel costs would hurt earnings. All Nippon Airways fell 1.6% in Tokyo and Cathay Pacific Airways slid 1.4% in Hong Kong.

Base Metal

Copper closed in positive territory for the first time in more than a week on the London Metal Exchange Thursday, as previously bearish trade players opted to wait on the sidelines until the situation in Libya clarifies. LME three-month copper traded 0.8% higher at $9,501 a metric ton at the PM kerb close, as cautious trading eased downward pressure on the metal. Aluminum also closed up on the day, trading at $2,540/ton, up 0.4% at the PM kerb close. While complex wide risk aversion has taken its toll on aluminum prices in recent days, the metal's energy-intensive production methods and the location of several smelters in the Middle East makes it particularly sensitive to rising oil prices and shipping flows from the region, said analysts.

Nickel put in the weakest performance of the day, closing down 4.1% at $27,505/ton.

Oil prices broke through $100 a barrel Thursday, hitting a fresh two and a half year high, as violent clashes in Libya further disrupted oil supplies from the key exporter. U.S. oil futures hit a high of $103.41 in intraday trading on the New York Mercantile Exchange, but later fell back to double-digit levels under the burden of robust petroleum inventories in the U.S. The April contract settled 82c lower at $97.28 a barrel. Supporters of Moammar Gadhafi's decades long rule in Libya struck back Thursday against protesters that now control much of the eastern part of the North African nation. The unrest has disrupted oil supplies from the world's 12th-largest crude exporter, while raising concerns that turmoil will spread to other major oil producers.

Gold futures closed modestly higher, receiving some support from safe-haven buying on the heels of the rising unrest in Libya but losing some steam after straight multiweek highs in recent sessions. Gold for April delivery added $1.80, or 0.1%, to $1,415.80 an ounce on the Comex division of the New York Mercantile Exchange. It was gold's highest settlement since Jan. 3.

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