World stocks slide on U.S. debt ceiling fears

NEW YORK Tue Jan 15, 2013 11:48pm IST

Traders work on the floor of the New York Stock Exchange, January 14, 2013. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange, January 14, 2013.

Credit: Reuters/Brendan McDermid

Related Topics

Stocks

   
A statue of Ganesh, the deity of prosperity, is carried in a taxi to a place of worship on the first day of the ten-day-long Ganesh Chaturthi festival in Mumbai August 29, 2014. REUTERS/Danish Siddiqui

Ganesh Chaturthi Festival

During Ganesh Chaturthi idols will be taken through the streets in a procession accompanied by dancing and singing, and will be immersed in a river or the sea in accordance with Hindu faith.  Slideshow 

NEW YORK (Reuters) - World equity markets slid and safe-haven U.S. Treasury debt rose on Tuesday as a looming battle in Washington over the government's borrowing limit and a recovery in the yen weakened demand for riskier assets.

Investors were cautious as Republican opposition in Congress to increase the $16.4 trillion debt ceiling raises the risk that the United States could default on its debt in coming months.

A warning by Federal Reserve Chairman Ben Bernanke on the economic effects of any failure to agree to a higher ceiling, a Treasury prediction the limit could be hit by mid-February and President Barack Obama's tough negotiating stance hit equity markets, which have gained since the New Year.

"There's a little bit of a risk-off trade," said Thomas Graff, fixed-income portfolio manager at Brown Advisory in Baltimore. "It looks like stocks reacting negatively to the wrangling over the U.S. debt ceiling, so Treasuries are higher."

Still, the likelihood of the United States not raising the debt ceiling and declaring default is "very low," Graff said.

The Dow Jones industrial average was down 6.76 points, or 0.05 percent, at 13,500.56. The Standard & Poor's 500 Index was down 1.62 points, or 0.11 percent, at 1,469.06. The Nasdaq Composite Index was down 10.31 points, or 0.33 percent, at 3,107.19.

Weak results from software company SAP (SAPG.DE) pulled technology stocks down, with Germany's benchmark DAX index falling to a 2013 low, but European shares ended flat.

SAP took the most points off the FTSEurofirst 300 index of top European shares and hit the STOXX Europe 600 technology index, which fell 2.1 percent to make it the region's worst-performing equity sector.

The Eurofirst 300 index of top shares closed 0.04 percent higher at a provisional 1,160.22 after a late-day rally pared losses.

The MSCI world equity index slipped 0.05 percent to 349.85, still near an 18-month high.

World equity markets and corporate bonds have risen sharply this year on a widely held view that the Federal Reserve's supportive monetary policies will boost the U.S. economic recovery while keeping returns on safe-haven assets such as Treasuries low.

The benchmark 10-year U.S. Treasury note was up 5/32 in price to yield 1.829 percent.

A contraction in New York state manufacturing for a sixth straight month in January also weighed on stocks, even as U.S. retail sales rose solidly in December, suggesting momentum in consumer spending as the year ended.

Other U.S. data on Tuesday showed inflation pressures remained muted, with wholesale prices declining for a third straight month in December.

The yen gained against the dollar, rebounding from four straight days of losses that pushed it to a 2-1/2 year low, as a warning from a Japanese minister about the disadvantages of excessive yen weakness prompted investors to shed bearish bets.

The dollar was down 0.88 percent at 88.67 against the yen. The euro was down 0.35 percent at $1.3335.

Brent crude oil fell 95 cents to $110.93, while U.S. light sweet crude oil fell 39 cents to $93.75 per barrel.

Spot gold prices rose $15.29 to $1,682.00.

(Reporting by Herbert Lash; Editing by Dan Grebler)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

REUTERS SHOWCASE

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Modi in Japan

Modi in Japan

Japan aims to double India investment in 5 years - Nikkei  Full Article 

Market Outlook

Market Outlook

Indian shares headed for correction, but outlook strong - BofA Merrill.  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage