GLOBAL MARKETS-, dollar gains

(Refiles to fix typo in headline)

* U.S. stocks slump as fear of more bank failures grows

* Dollar rises versus yen after strong U.S. factory data

* Oil slips below $69 a barrel on equities, strong dollar

U.S. stocks fell sharply on Tuesday as growing concerns about the U.S. banking system and over whether a recent rally in equity markets is warranted drove investors to the relative safety of bonds and the dollar.

Oil prices fell as the economic concerns outweighed surprisingly bullish U.S. data: the manufacturing sector grew in August for the first time in 19 months, while pending home sales hits a two-year high in July.

Government bond prices on both sides of the Atlantic rose as falling stocks enhanced the allure of lower-risk safe-haven debt despite the fresh evidence supporting the view of a global economic recovery.

There are “new concerns about the health of the banking system, the number

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U.S. stocks advanced on Wednesday after data showed July new home sales rose at their fastest pace in almost a year, while durable goods orders increased, but less than forecast excluding transportation.

Sales of new homes rose for a fourth straight month in July and at their fastest pace since September 2008, while the inventory of unsold homes fell to the lowest level in 16 years, the government reported.

“These are great numbers, and they should definitely add fuel to the move higher in the market,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

“It’s all very positive, not just because of the macro implications but because they will drive consumer confidence numbers (higher).”

The Dow Jones industrial average <.DJI> added 19.57 points, or 0.21 percent, to 9,558.86. The Standard & Poor’s 500 Index <.SPX> rose 2.15 points, or 0.21 percent, to 1,030.15. The Nasdaq Composite Index <.IXIC>

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The base metals were mostly in positive territory on Tuesday. Copper fell all through the pre-dawn hours, but once New York opened it was all on the opposite direction, as it finished just off its intraday highs at $2.1137/lb., up just short of 4 cents from Friday.

Nickel was flat until early New York trading, then took off, blasting past the $6 mark to close at $6.0267/lb., up almost 30 cents. Zinc was modestly lower at $0.6674/lb., down two-thirds of a cent. Aluminum edged higher, ending at $0.6426/lb., up nearly a half-cent, while lead added two-thirds of a cent, to $0.6428/lb.

Copper led the charge higher, as the big jump in consumer sentiment caused the market mood to turn on a dime. Earlier in the day, the metals had fallen, as the dollar strengthened and investors were worrying that world economies could take longer than expected to recover, driving down demand.

The

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U.S. housing starts and permits unexpectedly plummeted to record lows in April, torpedoing hopes of a housing market recovery as well as hopes the overall economy is regaining traction.

Starts for privately owned homes clocked in at a 458,000 annual rate, a 12.8% decline from March’s revised rate of 525,000 and a 54.2% dive from April 2008’s annual rate of 1,001,000 starts, according to a report from the U.S. Department of Commerce.

Meanwhile, building permits for privately owned housing units were applied for at a seasonally adjusted annual rate of 494,000, 3.3% below March’s revised rate of 511,000 and a 50.2% plummet from April 2008’s revised rate of 991,000.

The Commerce Department report also sheds light on the complexity of the housing market’s fallout and path to recovery.

Most strikingly, while starts in the West have dropped 52.9% from last year, they actually rose 42.5% from March 2009. The

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After a weekend in which the deepening U.S credit crisis sent one top investment bank to bankruptcy court and a second into the arms of a “White Knight” suitor, U.S. stocks yesterday (Monday) recorded their worst day since the 9/11 terrorists attacks seven years ago. Indeed, the Dow Jones Industrial Average plunged more than 504 points, its biggest one-day point decline since Sept. 17, 2001 – the day the markets reopened for trading after the attacks on New York and Washington. Wall Street entered last weekend anticipating a government bailout of Lehman Brothers Holdings Inc. (LEH), but exited with Merrill Lynch & Co. Inc. (MER) agreeing to sell itself to Bank of America Corp. (BAC) for nearly $50 billion – and with Lehman announcing it will seek bankruptcy in a bid to avoid a total ...