Reuters: US Dollar Report: GLOBAL MARKETS-Stocks, euro slide, pressured by Spain worry

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GLOBAL MARKETS-Stocks, euro slide, pressured by Spain worry Jul 23rd 2012, 20:00 Mon Jul 23, 2012 4:00pm EDT * Euro plumbs new 2-year lows on fears of bailout for Spain * Investors turn to safe-haven bonds, sending yields to new lows * Brent crude falls more than 3 percent on demand worries By Herbert Lash NEW YORK, July 23 (Reuters) - World equity markets sold off and the euro set new two-year lows against the dollar on Monday after reports that more indebted regions in Spain need financial aid fueled fears that the country may need a bailout. Investors fled to safe-haven government debt and the U.S. dollar as Spain's plight, concerns about economic growth and renewed market talk of a possible Greek exit from the euro zone drove investment decisions. The euro slid as low as $1.2067, its weakest since June 2010, but later pared losses to trade slightly higher at $1.2131. Against the yen, the euro slid near a 12-year low at 94.22 but later trimmed losses. U.S. crude futures fell about 3 percent, and yields on U.S., German and British government debt hit record lows. But yields on Spanish government debt hit euro-era highs, easing later in the session. Five- and 10-year German government bond yields set new lows and U.S. Treasury-note yields hit their lowest since the early 1800s. Ten-year U.S. Treasuries yields fell as low as 1.3977 percent, last trading up 6/32 in price to yield 1.4381 percent. Spanish media reported that up to six regions may seek aid from the central government after Valencia asked for funds on Friday. That request sent Spanish bonds to a euro-era high of more than 7.5 percent, above the 7 percent level many investors view as sustainable. How Spain's 17 indebted autonomous regions, locked out of international debt markets, refinance 36 billion euros in debt this year has been a major source of concern for investors ever since they missed deficit targets last year. "Given the market reaction on the back of the news that more and more regions are looking to tap into the liquidity fund ... it will be very difficult for Spain to circumvent further support for itself," said Norbert Aul, a rate strategist at RBC Capital Markets. Spanish Economy Minister Luis de Guindos has insisted Spain does not need a full sovereign bailout, such as those approved for Greece, Ireland and Portugal. The International Monetary Fund dismissed a weekend news report that it may refuse to continue supporting Greece as it prepares for talks with the new Greek government on its international bailout. Worry over Greece resurfaced with international lenders scheduled to gather in Athens on Tuesday to discuss the terms of further rescue payments after its prime minister said the country was mired in a "Great Depression." "All it does is it brings up that whole crisis again - all that tells you, it really didn't go away," said Ken Polcari, managing director at ICAP Equities in New York. Wall Street shares trimmed losses by afternoon after falling nearly 2 percent early. The Dow Jones industrial average was down 90.02 points, or 0.70 percent, at 12,732.55. The Standard & Poor's 500 Index was down 10.69 points, or 0.78 percent, at 1,351.97. The Nasdaq Composite Index was down 28.96 points, or 0.99 percent, at 2,896.34. Stocks in Europe ended lower by 2 percent or more. The FTSE Eurofirst 300 index of top European shares fell 2.4 percent to close at 1024.27 points, while the euro zone's blue-chip Euro STOXX 50 index dropped 2.6 percent to 2,179.31 points, breaking below a key support level. MSCI's emerging markets index was down 2.7 percent and its all-country world equity index fell 1.6 percent, trimming losses of more than 2 percent. Spain's main share index, the Ibex, closed down 1.1 percent, having dropped more than 4 percent earlier in the session. Brent crude, the world benchmark, briefly slipped below $103 a barrel. Brent settled down $3.57 at $103.26 a barrel. U.S. crude for September delivery settled down $3.69 a barrel at $88.14. The Reuters/Jefferies CRB Index of 19 commodities was down 5.69 points, or 1.87 percent, at 298.88. Spot gold prices fell $6.73 to $1,576 an ounce. Link this Share this Digg this Email Reprints

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