US consumers and businesses have kept a close watch on their cash in the run up to Christmas, with three separate reports showing flat or falling sales.

Orders for durable goods - costly items intended to last three years or more - fell unexpectedly in November the commerce department said.

"My take would be that people, manufacturers in particular, are going to sit on their hands till the Iraq situation is cleared up and some of that uncertainty is over," said Stephen Stanley of RBS Greenwich Capital Markets in Connecticut.

US chain stores reported only modest sales growth in the first three weeks of December, Instinet Research said in its weekly Redbook report.

Those figures were backed up by the Bank of Tokyo-Mitsubishi and UBS Warburg. They said in a joint report that heavy discounting and holiday promotions failed to part customers and their cash.

The figures dashed hopes of a early recovery after positive consumer spending figures in November.

Business fears

The commerce department report showed a 1.4% slide in durable good sales in November from a month earlier, highlighting businesses' reluctance to spend.

Wall Street analysts had expected a 0.7% gain and the dollar dropped because of the weak figures.

Orders for non-defence capital goods excluding aircraft - seen as a basic indicator of business spending - fell 2.2% in November, the government said.

A collapse in business spending on plant and equipment has been cited as one of the main causes for the US recession last year.

Consumer crunch

Sales at leading US chain stores grew just 0.2% in the three weeks ending 21 December compared with the same period last month, according to Instinet Research.

"Sales were consistently below plan across our entire sample in the third week," the Redbook report said.

Another study found sales were up just 0.1% in third week of December, after gaining 1.9% in the preceding week, the Bank of Tokyo-Mitsubishi and UBS Warburg said in a joint report.

"Although Saturday's sales were relatively good, the week's overall sales performance was less than spectacular," the report said.