LinkedIn soars as US economy splutters

A soaring debut by LinkedIn contrasted with a drop in semiconductor stocks including Intel as data on US home sales and manufacturing fell short of expectations, underpinning recent evidence of the weakness of the economic recovery.

Manufacturing in the US Mid-Atlantic region expanded less than forecast in May while existing home sales unexpectedly dropped in April. The US currency suffered as a result while equities on Wall Street pared gains.

A bright economic note was that fewer Americans than forecast filed first-time claims for unemployment benefits last week.

In late trading on Wall Street, the Dow Jones Industrial Average rose 0.19 per cent, the Standard & Poor's 500 Index edged 0.02 per cent higher and the Nasdaq Composite Index advanced 0.20 per cent.

"There's not much to get excited about," Hayes Miller, the Boston-based head of asset allocation in North America at Baring Asset Management, told Bloomberg News.

"We've seen some net negative surprises in recent economic indicators. People are questioning if this is only a downward blip. Chances are we'll work through this. For the time being, we've increased the defensiveness of our portfolio," Miller said.

Intel dropped after Goldman Sachs Group downgraded the world's largest chipmaker, as well as KLA-Tenor and Applied Materials because of intensified competition from tablet computers and excess supply.

LinkedIn soared 135 per cent to US$105.70 on its first day of trading. The shares were priced at US$45 each in the initial offering.

Today's economic data underpinned expectations the Federal Reserve won't raise interest rates any time soon.

The US dollar weakened 0.33 per cent against a basket of its major counterparts, and was down 0.2 per cent against the yen at 81.62. The euro was up 0.4 per cent on the day to US$1.4308.

"The Fed cannot raise rates in a slowing economic environment," Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut, told Reuters.

"Given the US Treasury states currencies should reflect economic fundamentals, we see a weaker [US dollar] going forward."

Oil slid, with US crude for June delivery trading US$1.43 weaker at US$98.67 barrel by 1740 GMT.

The Paris-based International Energy Agency has urged oil producers to boost supply to cut fuel costs, citing concerns about the global growth outlook. The IEA says its members could release emergency stockpiles if Opec failed to act.

The IEA statement, issued after its governing board met, was an unusual comment on producer policies, analysts told Reuters. Opec's next policy meeting is scheduled on June 8.

"Some of the new longs that came into the market after the recent fall of about US$20 a barrel are selling as the US economic data this morning wasn't supportive," Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut, told Reuters.

"The recent buyers pushed prices back to over US$100, but they were disappointed with the data on weekly jobless claims and regional manufacturing and are bailing out," he added.

In London, ICE Brent for July delivery fell 76 cents to US$111.54.