NEW YORK - U.S. Treasury bond and gold prices climbed on Tuesday, while stock prices dipped after news that a series of explosions in India's financial hub of Mumbai had killed more than 100 people.
Crude oil prices rose sharply, keeping in sight of record highs, after Iran, the world's fourth largest oil exporter, rebuffed international demands to halt uranium enrichment.
Adding to worries about Iran's nuclear ambitions, and growing tensions between the West and North Korea, the explosions in India sent investors for the safety of bonds, pushing 10-year yields to the lowest in almost a month.
And coming on the heels of disappointing results from manufacturing bellwether Alcoa Inc. and a profit warning from Lucent Technologies Inc., it helped trigger a broad-based fall in U.S. stocks.
"The blasts in India have put the market on edge," said Steve Leuer, an S&P 500 futures trader at X-FA Trading Group in Chicago. "I think the Lucent news and also yesterday's Alcoa earnings-related news have also kept pressure on the market."
The Dow Jones industrial average was down around 45 points, or 0.4 percent, at 11,058.33, its lowest since June 29. The Standard & Poor's 500 Index fell a third of a percent to 1,263.15.
Alcoa was the biggest drag on the Dow, falling 4.4 percent to $31.94 after the world's largest aluminum maker announced quarterly sales after the market's close on Monday that undershot Wall Street estimates.
U.S.-listed shares of major Indian companies, including Tata Motors Ltd. fell after news of the bomb explosions in Mumbai, which hit packed commuter trains and stations on Tuesday, killing at least 135 people.
The Lucent profit warning also weighed on tech stocks in Asia and Europe, helping push Japan's Nikkei share average down half a percent to 15,473.82.
The UK's benchmark FTSE 100 fell 0.7 percent to 5,857.3, also weighed down by a broker downgrade on Vodafone.
Treasuries Buoyant
U.S. Treasury bonds also gained support after the Bush administration said it had cut its estimate of this year's budget deficit by $127 billion to $296 billion due to surprisingly strong tax receipts in the year's first half.
Higher tax revenues would likely cut the government's need to issue new debt.
Benchmark 10-year notes were up 8/32 in price to yield 5.10 percent, down 3 basis points from late Monday and the lowest level since mid-June. The 2-year yield stood at 5.17 percent, unchanged from late Monday.
Oil rose as Iran's deputy foreign minister, on a trip to China, rejected calls that Iran halt its uranium enrichment program, raising concern again that the nuclear spat may eventually lead to disruption in crude supply.
U.S. crude futures for August delivery were up 49 cents at $74.10 a barrel, breaking a three-day losing streak. Gold futures in New York shot up more than 2 percent to hit a one-month peak.
Boosted by fund buying after news of the deadly bombings in Mumbai, gold for August delivery gained $14.90 to $641 an ounce, and briefly touched a peak of $641.30, the highest since early June.
In the currency markets, the U.S. dollar hit a near three-month high against the Canadian dollar after the Bank of Canada kept rates unchanged and gave no signal that it would raise rates any time soon.
The U.S. dollar was up almost 1 percent at C$1.1335, around its highest since late April.
But the dollar was little moved against the euro and the yen, as many currency traders were waiting for the result of a Bank of Japan meeting later in the week, which is expected to deliver the first rise in Japanese rates in six years.
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