NEW YORK (Reuters) - The euro hit a three-week low against the dollar and global stock markets dipped on Thursday as Spain’s debt burden fueled worries about further problems for euro zone economies and curtailed investors’ appetite for riskier assets.
Safe-haven U.S. Treasuries edged higher, along with gold prices.
Spanish 10-year government bond yields rose as high as 5.86 percent on Thursday, dragging Italian rates in their wake as investors fled to the relative safety of German and U.S. debt.
A poor Spanish bond auction on Wednesday added to worries that the impact of the European Central Bank’s one trillion euro injection of cheap three-year funds into the banking system may be coming to an abrupt halt.
“The whole European situation seems to be reheating ... and there is more safe-haven type buying,” said Sean Murphy, a Treasuries trader at Societe Generale in New York.
The MSCI world equity index was last down 0.1 percent, while U.S. stocks were little changed.
Traders cautioned that some of the moves may be exaggerated by thin trading ahead of an extended Easter weekend, and while global stock markets lost more than 1 percent of their value on Wednesday, they remain up almost 10 percent this year.
The Dow Jones industrial average was down 10.03 points, or 0.08 percent, at 13,064.72. The Standard & Poor’s 500 Index was up 0.31 points, or 0.02 percent, at 1,399.27. The Nasdaq Composite Index was up 3.25 points, or 0.11 percent, at 3,071.34.
Energy shares gained along with the price of oil. U.S. crude was up $1.33 at $102.80 per barrel, while Brent crude was up 52 cents at $122.86. Exxon Mobil (XOM.N) shares were up 0.3 percent at $85.20.
Offsetting some concern about the euro zone for U.S. stocks was data showing the number of Americans lining up for new jobless benefits fell to the lowest in nearly four years last week.
Spain’s IBEX 35 index fell 0.1 percent and touched a 7-month low as concerns mounted about Spain’s ability to meet its budget targets.
Europe’s FTSEurofirst 300 index was up 0.1 percent, though banking stocks, many of which have large exposure to the region’s lower-rated sovereign debt, edged lower.
Bucking the softer global trend, non-banking financial sector firms led Chinese shares to their biggest single-day gain since early February, after Premier Wen Jiabao said the monopoly formed by the country’s big banks needed to be broken to get money flowing to cash-starved companies.
Against the dollar, the euro was down 0.7 percent at$1.3052, having hit a three-week low of $1.3038. It also hit its lowest in four weeks against the yen at 106.86 yen before recovering slightly to trade at 107.23 yen, down 1 percent.
Spain’s cost of borrowing on markets over 10 years jumped 30 basis points on Wednesday after borrowing costs rose at the country’s auction of bonds. The yield premium over German benchmarks is now 411 basis points, its highest since late November before the ECB flooded the market with three-year funds.
Safe-haven assets moved higher.
The benchmark 10-year U.S. Treasury note was up 5/32, with the yield at 2.2038 percent, while spot gold was up 0.6 percent at $1,628.34 an ounce.
Weaker prices tempted some buyers in gold but gains were capped by a stronger dollar and fading hopes of a fresh round of U.S. stimulus.
Reporting by Caroline Valetkevitch, additional reporting by Emelia Sithole-Matarise and Michelle Martin in London and Karen Brettell in New York; Editing by Theodore d'Afflisio and Bernadette Baum