(Updates with closing U.S. markets' activity)
* Dollar rises after recent losses; sterling edges lower
* S&P and Dow end lower while Nasdaq gains
* Gold falls as dollar recovers
By Caroline Valetkevitch
NEW YORK, April 19 Oil prices dropped more than
3 percent on Wednesday following a surprise increase in gasoline
inventories, and declines in energy shares weighed on U.S.
The dollar recovered from recent weakness against the euro
and the safe-haven yen, while sterling was off
six-month highs hit after Britain's prime minister on Tuesday
called for a snap election.
Investors also braced for the coming French election. Four
days before the first round of the presidential election in
France, just a few points separate the top four candidates,
including two who oppose the euro - the far-right's Marine Le
Pen and the far-left's Jean-Luc Melenchon, according to opinion
In the oil market, the counter-seasonal build of 1.5 million
barrels in gasoline in the latest week, along with an increase
in U.S. production, pressured prices.
U.S. crude futures fell 3.8 percent to settle at
$50.44, while Brent crude futures dropped 3.6 percent to
The oil losses hurt shares of U.S. energy companies, pushing
the S&P 500 energy index down 1.4 percent and causing
the benchmark S&P 500 index to reverse earlier gains.
"Crude broke $52 on WTI, that is the strongest correlation
we have right now away from the case-by-case earnings we have,"
said Art Hogan, chief market strategist at Wunderlich Securities
in New York.
U.S. first-quarter earnings so far have been mostly stronger
than expected. On Wednesday, shares of Morgan Stanley
rose 2 percent following the bank's results, though
International Business Machines dropped 4.9 percent and
pressured the Dow.
The Dow Jones Industrial Average was down 118.79
points, or 0.58 percent, to 20,404.49, the S&P 500 lost
4.02 points, or 0.17 percent, to 2,338.17 and the Nasdaq
Composite added 13.56 points, or 0.23 percent, to
The pan-European STOXX 600 index, which hit a
three-week low on Tuesday, ended up 0.2 percent.
In the U.S. Treasury market, bond yields rose after a rally
on Tuesday sent yields to five-month lows prompted by concerns
about the French election and rising geopolitical tensions.
Benchmark 10-year notes dropped 8/32 in price to
yield 2.21 percent. The 10-year yield fell as low as 2.165
percent on Tuesday; it has tumbled from a high of 2.63 percent
reached on March 14.
Questions still hung over the "reflation" trades that had
lifted markets since Donald Trump became U.S. president. A run
of disappointing U.S. economic data and doubts the Trump
administration will progress with tax cuts have quelled
expectations of faster inflation.
Sterling was down 0.19 percent at $1.2811. It hit a
six-month peak against the dollar on Tuesday following
British Prime Minister Theresa May's call for an early general
election on June 8, seeking to strengthen her party's majority
ahead of Brexit negotiations.
Britain's FTSE 100 index fell 0.5 percent.
British stocks are vulnerable to a rising pound because more
than two-thirds of FTSE 100 company earnings are derived from
The greenback was 0.54 percent higher against the yen and up
0.17 percent against the euro.
Gold dropped 1 percent as the dollar gained, with spot gold
falling as low as $1,275.73 per ounce.
(Additional reporting by Jamie McGeever in London and Chuck
Mikolajczak and Julia Simon in New York; Editing by Nick