Reuters: US Dollar Report: GLOBAL MARKETS-Equities slide on European summit doubts

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GLOBAL MARKETS-Equities slide on European summit doubts Jun 25th 2012, 17:40 Mon Jun 25, 2012 1:40pm EDT * Pessimism about outcome of EU summit sours risk appetite * Government debt prices, dollar gain on safe-haven bid * Global equity markets, crude oil prices fall By Herbert Lash NEW YORK, June 25 (Reuters) - Global equity markets fell sharply on Monday on doubts that a European summit this week would make progress in solving the region's debt crisis, a pessimistic outlook that fed the bid for safe-haven assets. The euro fell broadly on investor skepticism the June 28-29 meeting of European Union leaders would produce substantive measures to tackle the debt crisis, now in its third year and buffeting Spain, the euro zone's fourth-largest economy. Spanish and Italian bond yields rose in a sign of investor skittishness, while the dollar and the price of U.S. government debt rose as investors sought safety. The price of benchmark 10-year U.S. Treasury notes rose 20/32 to yield 1.61 percent. German Chancellor Angela Merkel dashed any lingering hope in financial markets that Europe would issue common euro zone bonds to underpin its single currency after Spain formally became the fourth country to request a financial rescue. Merkel said shared debt liability within the euro zone was "economically wrong" and "counterproductive." The absence of Greece's new prime minister and finance minister due to illness complicated the summit's outlook. The two-day summit in Brussels will be the 20th time EU leaders have met to try to resolve a crisis that has spread across Europe since it began in Greece in early 2010. "Hopes are fading for major action even before the summit begins; hence the bid to Treasuries and weakness in equities," said David Ader, head of government bond strategy at CRT Capital in Stamford Connecticut. Stocks on Wall Street traded sharply lower, with the S&P 500 down almost 2 percent, surpassing declines of more than 1 percent in Europe and elsewhere. The Dow Jones industrial average was fell 1.34 percent to 12,471.70. The Standard & Poor's 500 Index slid 1.82 percent to 1,310.72. The Nasdaq Composite Index tumbled 2.06 percent to 2,832.96. The FTSEurofirst 300 index closed down 1.6 percent at 986.41 points, its biggest daily fall in more than three weeks, as stocks retreated for a third successive session. The MSCI all-country world equity index slipped 1.5 percent, while its emerging market index fell 1.4 percent. Spanish government bonds came under pressure after Spain formally requested aid to recapitalize its banks, but did not specify how much money it would need. Ten-year Spanish government bonds fell pushing yields higher, to 6.64 percent, while the cost of insuring five-year Spanish debt also rose. German bonds snapped three weeks of losses to gain on safe-haven buying. The price of bund futures settled up 127 ticks at 142.15 while the yield on 10-year government bonds fell to 1.465 percent. Pessimism about the summit's outcome drove all markets. "There's some nervousness ahead of the EU summit. Reports about the meeting have not intensified hopes or expectations that there will be agreement or any big progress," said Niels Christensen, currency strategist at Nordea. The euro fell to its lowest in almost two weeks against the dollar and looked set to extend losses. The euro fell as low as $1.2469, the weakest since June 12, and was last down 0.4 percent at $1.2500. It lost 1.6 percent to 99.44 yen. Brent crude slipped, falling below $90 at one point, with concerns about faltering global growth and Europe's intractable debt crisis hitting investor confidence. Brent crude was last down 30 cents at $90.68 a barrel. U.S. crude fell 76 cents to $79.00 a barrel. Spot gold prices rose $15 to $1,586.50 an ounce. The Reuters/Jefferies CRB Index was down 2.17 points at 270.14. Link this Share this Digg this Email Reprints

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