June 28, 2012 / 5:09 PM / 6 years ago

GLOBAL MARKETS-US stocks sag on healthcare rule, euro dips

* U.S. healthcare sector weakens after top court decision
    * JPMorgan, Barclays lead world bank shares lower
    * Euro falls to three-week lows on low EU summit hopes
    * Data raise worries about global economic growth

    By Richard Leong
    NEW YORK, June 28 (Reuters) - U.S. stocks fell on Thursday
after the U.S. Supreme Court upheld the Obama administration's
healthcare overhaul law, while the euro hit a three-week low as
divisions among European leaders at a meeting in Brussels
further diminished hopes of urgent measures to tackle the
region's debt crisis.
    The court upheld the centerpiece of President Barack Obama's
healthcare reform law that requires most Americans to get
insurance by 2014 or pay a fine. Republican leaders and other
opponents who claim the law is too costly and an over-reach of 
government power vowed to repeal it. 
    U.S. healthcare sector stocks were generally weaker
after the ruling, while stocks that stand to benefit from more
government business rallied.  
    Financial shares took a beating after British bank Barclays
plc paid record fines in a probe of its manipulation of
interbank loan rates. A newspaper report saying U.S. bank
JPMorgan's losses on recent botched trades could reach
$9 billion hurt the banking sector.
    Investors turned more cautious after data showed the U.S.
economy is losing momentum, while Germany's unemployment rose in
June, posing a risk for global growth. 
    Also weighing on investor sentiment was whether Obama and
Congress will agree to extend tax cuts and unemployment benefits
before year-end. Traders fear a failure to continue these
measures could tip the United States into recession.
    "There is an overhang from Europe and here on Capitol Hill.
That's creating pessimism and pessimism brings low
expectations," said Jack Ablin, chief investment officer at
Harris Private Bank in Chicago.
    Analysts said that with the market so focused on the outcome
of the European summit, trade in stocks and the euro would
remain choppy, driven by headlines from the meeting.
    European Union leaders will ask the bloc's top four
officials to develop the building blocks they have identified so
far into a detailed, time-bound roadmap to a genuine economic
and monetary union, draft conclusions of the EU leaders' summit
    Nagging doubts over significant progress toward a crisis
solution at the meeting pushed yields on 10-year Spanish bonds
above 7 percent and 10-year Italian debt to 6.25 percent. These
are seen as unsustainable borrowing costs for the euro zone's
third- and fourth-biggest economies.
    Wall Street's three major indexes were around 1 percent
lower, led by losses in the banking and healthcare sectors.
    In midday trade, the Dow Jones industrial average was
down 131.12 points, or 1.04 percent, at 12,495.89. The Standard
& Poor's 500 Index was down 13.70 points, or 1.03
percent, at 1,318.15. The Nasdaq Composite Index was
down 42.81 points, or 1.49 percent, at 2,832.51. 
    The S&P healthcare index was down 0.99 percent,
while the Morgan Stanley healthcare payor index was last
up 0.3 percent, rebounding from an earlier 1.0 percent drop
shortly after the high court narrowly upheld the landmark law
that requires most Americans to buy healthcare insurance.
    Shares of large health insurers fell, with Wellpoint 
down 4.8 percent at $66.14, while Centene Corp and
Molina Healthcare, which specialize in Medicaid programs
for the poor, rose 1.6 percent and 4.8 percent, respectively.
    JPMorgan shares were down $1.72, or 4.7 percent, at
$35.06 after the New York Times, citing people briefed on the
situation, reported losses from a soured credit derivative trade
could be as much as $9 billion after the U.S. bank said in May
it had lost $2 billion on the trade. 
    The FTSEurofirst 300 index of top European company
shares provisionally ended down 0.5 percent at 995.14 points.
The STOXX European banking index closed down 2.36
    Barclays stock shed 15.5 percent at 178.65 pence after the
bank agreed to pay a $453 million fine for manipulating interest
rates on the London interbank market. 
    MSCI's world equity index fell 0.66 percent
to 1,193.86. 
    The euro fell 0.35 percent to $1.2425 after touching
a three-week low versus the dollar at $1.2405. 
    The dollar index was up 0.23 percent at 82.805 after
touching its highest level in about 1-1/2 weeks.
    The move to lower-risk investments fed bids for U.S.
Treasuries and German Bunds. Benchmark 10-year Treasury notes
 were up 14/32 in price at 101-19/32 to yield 1.57
percent, down nearly 5 basis points, while Bund futures 
were up 0.5 percent at 141.83.  
    Anxiety about slowing global growth and the outcome of the
EU summit stoked selling in oil and other commodities.
    Gold fell more than 1 percent to its lowest level
since June 1 at $1,549.99 an ounce. It last traded at
    Brent crude futures in London fell $1.57, or 1.68
percent, to $91.93 a barrel, while U.S. oil futures 
dropped $1.99, or 2.48 percent, at $78.22 a barrel.
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