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Mixed Messages Send Stocks Lower

Wall Street drifted lower yesterday as a mixed bag of economic news and losses in energy stocks outweighed a string of positive updates from retailers in the first trading session of 2005.

Bulls continued to be frustrated at the lack of a traditional post-Christmas bounce, which eluded investors as the stock market sputtered in the last trading sessions of 2004.

US stocks remain near 3 1/2-year highs, in spite of their lacklustre year-end run. And, although the rate of economic growth is expected to moderate this year as the effects of interest rate rises take hold and inflationary pressure mounts, many analysts expect the market to continue its forward momentum into early 2005.

Anirvan Banerji, director of research at the Economic Cycle Research Institute, said: "We have an ongoing global industrial slowdown, but the outlook is fairly resilient." He added that, in spite of uncertainties about the US twin deficits and the weakening dollar, "for the time being we are likely to see a global expansion."

A mixed bag of economic news greeted investors yesterday, with one report showing rising orders and declining employment at US factories. Seperate figures showed that construction spending slowed in November, confounding expectations of a modest rise.