Euro, global stocks fall on euro zone woes

8. February. 2010
Reuters

Wall Street followed European and Asian markets lower on Monday, as the euro fell and bond yields slid on persistent worries about the fiscal health of southern countries in the euro zone.

Upbeat results and outlooks from U.S. corporations failed to offset the broad negative sentiment about fiscal woes in Europe as Greek civil servants warned they could call more strikes to oppose the government's deficit-cutting plan.

Investors also were disappointed that the weekend meeting of the Group of Seven industrialized nations did not lead to concrete action to tackle the sovereign debt problems of countries such as Greece, Portugal and Spain.

U.S. Treasury debt prices, which move in the opposite direction of their yield, edged higher amid the unease over the fiscal soundness of highly indebted countries.

Greek government bond yield spreads over German benchmarks rose as investors fled the perceived weakness in deficit-reduction plans and avoided assets deemed risky.

"It's difficult enough for investors to digest when companies can't meet obligations. When countries can't meet their obligations, it sends more pronounced shivers through the market," said Andre Bakhos, president of Princeton Financial Group in North Brunswick, New Jersey.

"It hurts sentiment in the fact that the underlying global fundamentals remain shaky."

The Dow Jones industrial average .DJI slipped 40.43 points, or 0.40 percent, to 9,971.80. The Standard & Poor's 500 Index .SPX dipped 1.48 points, or 0.14 percent, to 1,064.71. The Nasdaq Composite Index .IXIC eased 1.83 points, or 0.09 percent, to 2,139.29.


European shares added to steep declines from last week as the sovereign debt problems weighed on banks and offset a rally in defensive sectors like drugmakers and food producers.

By 10 a.m. EST, the pan-European FTSEurofirst 300 .FTEU3 index slipped 0.1 percent at 971.27 points, after hitting a three-month low at 967.85 points earlier.

The euro hovered near an 8-1/2 month lows versus the greenback.

The euro was down 0.01 percent at $1.366, and the dollar fell against a basket of major currencies, with the U.S. Dollar Index .DXY dipped 0.13 percent at 80.333.

Against the yen, the dollar was down 0.13 percent at 89.21 from a previous session close of 89.330.

The benchmark 10-year U.S. Treasury note was off 1/32 in price to yield 3.58 percent.

Oil topped $71 a barrel, supported by the weaker U.S. dollar and as some investors viewed the previous session's decline to a near two-month low as a buying opportunity.

Spot gold prices fell 55 cents to $1,064.40 an ounce.

Earlier in Asia, Japan's Nikkei average .N225 fell 1.1 percent to a two-month closing low as exporters like Sony Corp (6758.T)(SNE.N) were clobbered by a strong yen. Asia Pacific shares outside Japan as measured by MSCI .MIAPJ0000PUS fell 0.8 percent to its lowest levels since early September.