Wariness bolsters safe bets on world markets overnight

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As the trading week begins in North America, investors remain reticent to place bets and that forebodes a sixth consecutive week of falling stock prices on Wall Street.

In afternoon trading in New York, the Dow Jones industrial average fell 19.75 points, or 0.16 per cent, to 12,131.51. The Standard & Poor's 500 Index slid 5.97 points, or 0.46 per cent, to 1,294.19. The Nasdaq Composite Index shed 9.66 points, or 0.35 per cent, to 2,723.12.

Friday's May payrolls data continues to cast a shadow over what lies ahead. The report showed the US economy generated far fewer new jobs than expected, confirming that the recovery has hit a soft spot.

Yet all wasn't lost as the selling on Wall Street seems to have steadied and buyers are starting to see value.

"I don't expect the market to run, but we're getting to levels where there's going to be some real good value down there," Muriel Siebert, chairwoman of Muriel Siebert & Co in New York, told Reuters. "(Investors) can buy and put a lot of good stocks away for the long term."

The S&P 500 has tumbled more than 5 per cent from a nearly three-year high at the end of April, leaving the index trading at 12.3 times estimated earnings, the lowest valuation since September, according to data compiled by Bloomberg.

"We had very negative economic data points last week," Tom Wirth, senior investment officer for Chemung Canal Trust Co., told Bloomberg. "I'm expecting the recovery will come back in the second half. For the time being, I'm not expecting much from the market."

Regional Fed President Charles Plosser has a fresh idea for calming the markets: provide a detailed plan about how the US central bank will withdraw monetary stimulus and also outline the return to more normal levels for interest rates.

While investors no doubt would like the details, it's unlikely Fed Chairman Ben Bernanke will want to be that transparent.

In Europe, investors are on their own policy watch ahead of the European Central Bank policy meeting later this week.

At an international financial conference in Montreal, ECB President Jean-Claude Trichet has called for tougher EU action to forestall future sovereign debt crises. He also took the opportunity - as has German Chancellor Angela Merkel - to say the EU's current situation isn't a currency issue.

"The Governing Council of the ECB is concerned that, although they are going in the right direction, the economic governance reforms being discussed are not ambitious enough to correct the structural weakness of fiscal governance and, more broadly, macroeconomic governance, of the euro area," Trichet said.

"The tensions we face in Europe today are not a crisis of the euro. They do not indicate a crisis in the monetary union," Trichet also said.

US bond investors - like their equities counterparts - are keeping bets to a minimum. Prices have eased ahead of the US Treasury's planned auctions in the next few days.

The Treasury is set to sell US$32 billion of three-year notes on Tuesday, US$21 billion of reopened 10-year notes on Wednesday and US$13 billion of reopened 30-year bonds on Thursday.

Short of any major unforeseen developments, investors will have little incentive to push markets in any particular direction this week.

A meeting with Warren Buffett appears to be more appealing - according to Bloomberg, charity bids for a lunch date with the billionaire have reached US$2 million with four days of bidding to go. The afternoon affair went for US$2.63 million last year.