Reuters: US Dollar Report: GLOBAL MARKETS-Stocks, euro slip on weakening growth

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GLOBAL MARKETS-Stocks, euro slip on weakening growth May 24th 2012, 17:23 Thu May 24, 2012 1:23pm EDT * Wall Street stocks slip on weak growth data * Euro falls, dollar index near 20-month high * German debt yields hit record low, U.S. yields up * Oil, gold rise after Wednesday's losses By Richard Leong NEW YORK, May 24 (Reuters) - U.S. stocks and the euro edged lower on Thursday as data suggested Europe's debt woes were spreading and worsening a global economic slowdown. In a volatile session, investors looking for bargains earlier bought equities, oil and gold which have been battered this week by worries Greece would leave the euro zone. But the buying of growth-oriented assets faded as worries about the euro zone's drag on the world economy returned. Stocks and other riskier assets turned negative as disappointing data from Europe, China and the United States compounded concerns about the economic contraction moving across Europe. Amid speculation of more coordinated efforts from major central banks to stem further deterioration of the euro zone debt crisis, bond yields of Spanish, Italian and other weaker euro zone members fell. Still, the yields remained at levels considered unsustainable. This moderated the safe-haven appetite for U.S. and German government debt. "We are just being buffeted around by despair and hope of the possible solution to the euro zone crisis. Risk appetite is still at a very low level, but there is plenty of value," said Robert Parkes, equity strategist at HSBC in London. On Wall Street, the Dow Jones industrial average was down 13.21 points, or 0.11 percent, at 12,482.94. The Standard & Poor's 500 Index was down 1.56 points, or 0.12 percent, at 1,317.30. The Nasdaq Composite Index was down 11.65 points, or 0.41 percent, at 2,838.47. Europe led the earlier rebound in global shares. The FTSEurofirst 300 index of top European stocks closed up 1.1 percent at 982.61 after slipping 2.2 percent in choppy trade on Wednesday. In Tokyo, the Nikkei index closed up 0.1 percent at 8,563.38. The MSCI world equity index moved back above 300 points, up 0.3 percent following Wednesday's 1.2 percent drop. Data showing further slowing in factory growth in China and the United States were alarming to investors as they showed the world's two largest economies might not be able to escape the drag from the euro zone's fiscal problems. "It is clear that the United States will not decouple with anyone else. The market is not driven by data but events from across the ocean," said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York. The euro approached two-year lows in reaction to weak factory and business sentiment data in Germany, the euro zone's most powerful economy. The euro zone common currency last traded down 0.3 percent at $1.2544 after falling to $1.2514, near a two-year low. While the euro bounced within a tight range, the dollar resumed its rally against major currencies. The dollar index was last up 0.2 percent at 82.235 after touching a 20-month high at 82.362. A Wednesday summit of European Union leaders, who have been advised by senior officials to prepare contingency plans in case Greece decides to quit the currency bloc, was unable to shed new light on what euro zone nations plan to do. As a result, 10-year German government bond yields fell to a record low of 1.35 percent before moving higher with a drop in peripheral debt yields. The yield on 10-year Spanish government debt fell 6 basis points to 6.16 percent, while the yield on 10-year Italian government notes declined 11 basis points to 5.70 percent. Yields on U.S. government debt, which have flirted with historic lows on intense demand for safe assets, rose on jitters about bidding on $29 billion worth of new seven-year debt. While overall demand for the new seven-year notes was solid, their yield came in slightly above expectations. Benchmark 10-year Treasury notes were last down 11/32 in price, yielding 1.77 percent, up 4 basis points on the day. The 10-year yield is only 10 basis points above the lowest level seen in at least 60 years. In the oil market, prices recovered from the prior day's losses as talks between world powers and Iran over its nuclear program hit a snag, stirring fears of supply disruption and a new Mideast conflict. July Brent futures rose $1.11 at $106.67 a barrel, a day after they fell near their lowest in five months. U.S. oil futures climbed $1.24 at $91.14 a barrel after hitting its lowest since Nov. 1 on Wednesday. Spot gold snapped a three-session losing steak as the dollar stalled against the euro. Bullion prices last traded up 0.3 percent at $1,564.81 an ounce. Link this Share this Digg this Email Reprints

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