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GLOBAL MARKETS-World stocks, euro slip on Spanish debt concerns
April 5, 2012 / 2:17 PM / 6 years ago

GLOBAL MARKETS-World stocks, euro slip on Spanish debt concerns

* World stocks ease, U.S. stocks open lower

* Shangai shares up on China bank policy

* Euro falls to 3-week low vs dollar

* Spanish 10-year yields rise 12 basis points to 5.86 percent

NEW YORK, April 5 (Reuters) - Global stocks declined and the euro hit a three-week low against the dollar Thursday as Spain’s debt burden fueled worries about further problems for the euro zone, crimping investors’ appetite for riskier assets.

Safe-haven U.S. Treasuries gained, 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 0.2 percent, while U.S. stocks opened lower.

Traders cautioned that some of the moves may be exaggerated by thin trading volumes before the Easter break 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 48.06 points, or 0.37 percent, at 13,026.69. The Standard & Poor’s 500 Index was down 4.67 points, or 0.33 percent, at 1,394.29. The Nasdaq Composite Index was down 4.86 points, or 0.16 percent, at 3,063.23.

Data showing the number of Americans lining up for new jobless benefits fell to the lowest in nearly four years last week, helped to limit U.S. stock losses.

Spain’s IBEX 35 index were down 1.3 percent and touched a 7-month low as concerns mount about Spain’s ability to meet its budget targets.

Europe’s FTSEurofirst 300 index fell 0.3 percent, with banking stocks, many of which have large exposure to the region’s lower-rated sovereign debt, among the worst performers.

Chinese shares bucked the softer global trend, posting their biggest single-day rise since early February led by non-banking financial sector firms 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 jumped 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 10/32, with the yield at 2.1877 percent, while gold was up 0.2 percent at $1,622.30 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.

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