Dow falls on war fears

War fears overshadowed encouraging economic reports today on Wall Street, sending stock prices lower for a third consecutive day. The Dow Jones industrials fell to their lowest level in nearly six weeks.

Analysts said trading was coppy as investors struggled to decide whether to buy on bets of stronger prospects in 2003. But the escalating rhetoric on Iraq ultimately gave them another reason to sell, they said.

The Dow Jones industrial average fell 82.55, or 1%, to close at 8,364.80, for a three-day loss of 262 points. It was the lowest finish since November 11, when blue-chip stocks closed at 8,358.95.

The broader market also declined. The Nasdaq composite index lost 7.30, or 0.5%, to close at 1,354.21. The Standard & Poor’s 500 index dropped 6.85, or 0.8%, to 884.27.

Chief UN weapons inspector Hans Blix told the Security Council that Iraq’s 12,000-page weapons declaration contains gaps and inconsistencies. The United States called Iraq in “material breach” of UN resolutions, setting a course for a possible war early next year.

Investors, meanwhile, largely shrugged off reports showing modest improvements in the economy.

The Labour Department reported that new claims for unemployment benefits dropped last week by a seasonally adjusted 11,000 to 433,000. Yet, even with the drop, claims remained above the 400,000 mark, a level associated with a lacklustre job market.

And the New York-based Conference Board said its Index of Leading Economic Indicators rose 0.7% in November, the largest monthly gain in a year, following a revised 0.1% increase the previous month. The November figure slightly beat analysts’ estimates.

Declining shares included AT&T, which fell 1.20 to 25.11, and Eastman Kodak, which dropped 1.22 to 35.95.

But Oracle rose 37 cents to 11 after the business software maker reported earnings that beat analysts’ expectations.

Dole Foods jumped 4.13, or 14.5%, to 32.58, after its chairman, David Murdock, agreed to buy all the giant food company’s outstanding shares he does not own and take it private in a 2.5 billion deal.

Declining issues outnumbered advancers 17 to 11 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, fell 0.52, or 0.1%, to 383.41.