Reuters: US Dollar Report: GLOBAL MARKETS-Euro, stocks slide on Spanish bailout fears

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GLOBAL MARKETS-Euro, stocks slide on Spanish bailout fears Jul 23rd 2012, 15:05 Mon Jul 23, 2012 11:05am EDT * World shares fall as euro plumbs new two-year lows * Investors turn to safe-haven bonds, sending yields to fresh records * Oil falls about $4 a barrel By Herbert Lash NEW YORK, July 23 (Reuters) - The euro hit its lowest level in more than two years and world equity markets fell sharply on Monday after reports that Spain's indebted regions need help fueled fears the country will become the fourth euro-zone member to ask for a major bailout. Investors sold off assets viewed as riskier and fled to the perceived safety of U.S., British and German government debt and the U.S. dollar as the concerns about economic growth and the plight of Spain drove investment decisions. Crude oil tumbled more than 3 percent, and yields on U.S., British and German government debt hit record lows. Yields on government debt in Spain set euro-era record highs. Five- and 10-year German government bond yields hit 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, and last traded up 9/32 in price to yield 1.4263 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 viewed 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. The euro slid as low as $1.2067, its weakest since June 2010, and was last down 0.24 percent at $1.2093. Against the yen, it was near a 12-year trough. "The week is off to a challenging start as rising fears over Europe push risk aversion higher," said Camilla Sutton, chief currency strategist at Scotia bank in Toronto. "Most of the focus is on Spain, with rising concern it too will need to access financial aid," Sutton said. U.S. stocks traded down more than 1 percent lower, while equity markets in Europe and elsewhere fell more than 2 percent. The Dow Jones industrial average was down 168.92 points, or 1.32 percent, at 12,653.65. The Standard & Poor's 500 Index was down 19.35 points, or 1.42 percent, at 1,343.31. The Nasdaq Composite Index was down 54.66 points, or 1.87 percent, at 2,870.64. The FTSE Eurofirst 300 index of top European shares fell 2.3 percent to 1025.14 points, while MSCI's emerging markets index was down 2.8 percent and the all-country world equity index fell 2.0 percent. Spain's main share index, the Ibex, was down 0.75 percent, paring losses of about 4 percent earlier in the session. Highlighting Spain's urgent situation, the country must make coupon and redemption payments to bondholders totaling 20 billion euros ($24.3 billion) next Monday. Spanish Economy Minister Luis de Guindos, who visits Berlin on Tuesday for talks with Germany's finance minister, has insisted Spain does not need a full sovereign bailout, such as those for Greece, Ireland and Portugal. Data from the Commodity Futures Trading Commission released on Friday showed that currency speculators are increasing their bets in favor of the dollar as Europe's debt crisis shows signs of growing worse and threatens the global economy. Oil prices briefly slipped below $103 a barrel. Brent crude was down $4.13 at $102.70 a barrel, while U.S. crude fell $3.83 to $88.00 a barrel. Link this Share this Digg this Email Reprints

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