Reuters: US Dollar Report: GLOBAL MARKETS-Stocks, euro fall as fears on Greek euro exit weigh

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GLOBAL MARKETS-Stocks, euro fall as fears on Greek euro exit weigh May 25th 2012, 19:35 Fri May 25, 2012 3:35pm EDT * Markets turn skittish after Catalonia debt appeal * Euro briefly slips below $1.25, weighed down by Spain * Bond prices rise on safety bid, oil advances modestly By Herbert Lash NEW YORK, May 25 (Reuters) - U.S. stocks and the euro slipped on Friday as Spain's deteriorating finances and a possible Greek exit from the euro overshadowed an upbeat report on U.S. consumer confidence. Oil prices edged higher due to a lack of progress in talks with Iran over its disputed nuclear program and the rise in U.S. consumer confidence. European equities rose for a second straight day, but gains were driven by defensive plays like utilities and drugmakers. A tough economic outlook in Europe dampened investors' appetite for riskier assets. After notching some gains in the day, U.S. equities fell as the afternoon progressed ahead of the long holiday weekend, as uncertainty continued to swirl over Europe. "The market is drifting and cautious ahead of the holiday. There's no consistency, though we do seem to be digging in after some bad weeks," said Donald Selkin, chief market strategist at National Securities in New York, which has about $3 billion in assets under management. "Still we have the overhang of Europe and just have to hope things don't get worse over there." The Dow Jones industrial average was down 97.29 points, or 0.78 percent, at 12,432.46. The Standard & Poor's 500 Index was down 5.48 points, or 0.41 percent, at 1,315.20. The Nasdaq Composite Index was down 7.80 points, or 0.27 percent, at 2,831.58. In Europe, the FTSEurofirst 300 index rose 0.2 percent to close at 984.97. MSCI's all-country world equity index fell 0.2 percent at 300.24. Trading volume in Europe was lower than an already weak 90-day average, reflecting a downbeat mood that was heightened by concerns about Greece ahead of the three-day U.S. Memorial Day weekend. The euro plumbed a 22-month low against the U.S. dollar after the president of Catalonia, Spain's wealthiest autonomous region, said it is running out of options for refinancing more than 13 billion euros in debt that comes due this year. Catalonia's troubles came as Spain's Bankia SA is set to ask the state for a bailout valued at more than 15 billion euros ($19 billion), marking another rise in the cost of rescuing the country's fourth-biggest bank. "The Catalonia news was a big deal because it implies that the Spanish government may have to take on more debt, and it cannot afford to do so," said Richard Franulovich, senior currency strategist at Westpac Securities in New York. "For now, it's all about contagion," he added. The euro briefly fell below $1.25 on trading platform EBS but pared some losses to trade down 0.1 percent at $1.2512. The U.S. Dollar Index rose 0.08 percent at 82.412. Bonds prices rose in a bid for safety as investors prepare for what is likely to be volatile trading over the coming month. The benchmark 10-year U.S. Treasury note was up 10/32 in price to yield 1.75 percent. Brent crude rose 28 cents to settle at $106.83 a barrel. U.S. light sweet crude oil rose 30 cents to $90.96. But even as oil prices rose on the day on the lack of progress related to Iran and the improved U.S. consumer sentiment, crude futures were headed for a fourth straight weekly loss as Europe's economic problems threatened to reduce demand. The Thomson Reuters/University of Michigan's final reading on the overall index on U.S. consumer sentiment rose to 79.3 from 76.4 in April, topping forecasts for 77.8 and an initial May reading of the same. "Unfortunately, consumer confidence is still extremely vulnerable to a reversal, as occurred in the past two years," survey director Richard Curtin said in a statement. Traders said the outlook is negative. "Europe is in a recession, China is slowing down, and the United States is slowing down as well," said Michel Juvet, chief investment officer at Swiss bank Bordier & Cie. Spot gold prices rose $16.21 to $1,573.20 an ounce. The Reuters/Jefferies CRB Index of commodities was up slightly at 281.95. Link this Share this Digg this Email Reprints

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