Stocks finish lower after erratic session

NEW YORK » Wall Street seesawed through an erratic session Monday, trying to stabilize but ultimately finishing near its lows of the day amid worries about mortgage defaults, a strengthening yen and tumbling stock markets abroad.

The major indexes fluctuated throughout the session, with the Dow Jones industrials bobbing between positive and negative territory as investors tried to size up where the market was headed after last week's big decline. The Dow finished 63 points lower, having fallen in eight of the last nine sessions.

The market remained jittery about losses over soured subprime loans, or loans to customers with poor credit ratings. HSBC Holdings PLC, Europe's largest bank, said its 2006 earnings rose 5 percent but that it suffered $10.6 billion in losses on bad loans from its U.S. subprime mortgage operations.

Also pushing stocks down, a rising yen added to concerns about an erosion of the yen carry trade, which is the process of borrowing the low-yielding yen to acquire assets in other currencies with greater yields. A slowdown could hurt liquidity worldwide. By late in the day, the U.S. dollar was at 116 yen, trading near three-month lows after falling from above 120 yen less than a week ago.

Though the markets were uneasy yesterday, they were hardly out of control as the Dow traded within a 150-point range and stayed above the 12,000 mark, which it had surpassed for the first time in October last year.

"Stability is a good sign," said Todd Salamone, senior vice president of research at Schaeffer's Investment Research in Cincinnati.

He noted that stocks could see volatility for months, but that over the long term, the market looks poised to climb.

"Expectations for economic data, earnings data -- both have been ratcheted lower. Markets tend to do better when expectations are low, because they have better odds for positive surprises."

The Dow fell 63.69, or 0.53 per- cent, to 12,050.41, having swung 75 points lower and 75 higher than Friday's close in earlier trading.

Broader stock indicators also fell. The Standard & Poor's 500 index slipped 13.05, or 0.94 percent, at 1,374.12, and the Nasdaq composite index -- which is dominated by riskier technology and smallcap stocks -- dropped 27.32, or 1.15 percent, to 2,340.68.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where consolidated volume came to 3.44 billion shares, compared to 3.36 billion at the same point on Friday.

The Russell 2000 index of smaller companies dropped 15.38, or 1.98 percent, at 760.06.

Bond prices fell, nudging the yield on the benchmark 10-year Treasury note to 4.51 percent from 4.50 percent late Friday, as the stock market's tolerable performance earlier in the day kept investors from rushing to Treasurys.

The dollar was higher against other major currencies except for the yen. Gold, though traditionally a safe-haven investment, continued its slide.

Oil prices finished down $1.57 at $60.07 on the New York Mercantile Exchange.