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[EmpireGlobalfx]

World stocks fall on doubts over EU plans


(Reuters) - World stocks fell toward the previous week's 14-month low on Monday and the euro hit a 10-year low against the yen as doubts grew over how effective Europe's latest crisis-battling steps would be in containing the continent's sovereign debt problems.

European policymakers began working on new ways to stop fallout from Greece's near default, focusing on ways to beef up their existing 440-billion-euro rescue fund.

But deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

Concerns over the potential effect from Greece's possible default, especially on the banking sector, and worries over a U.S. economic slowdown have been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

"Overall it's still an inconclusive situation -- no tangible action plan coming out of the weekend gathering so the net result will still be risk aversion," said Rainer Guntermann, strategist at Commerzbank.

MSCI world equity index fell 1.1 percent, having hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

European stocks lost 0.8 percent while emerging stocks hit their weakest since September 2009.

"The lurch lower in risk appetite can only reflect a growing fear that policymakers will be incapable of acting in time or with sufficient potency to turn things around," said Herv Goulletquer, analyst at Credit Agricole.

U.S. crude oil dropped 1.8 percent to $78.40 a barrel.

Bund futures were up nine ticks before trimming gains.

The dollar was steady against a basket of major currencies.

The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361.

 

[EmpireGlobalfx]

Stocks rise, euro steady on European hopes

(Reuters) - Global equities rose and bond prices fell on Monday on hopes that Europe was tackling Greece's debt woes.

Wall Street stocks recovered from early declines but European shares pared gains of more than 2 percent as concerns about Europe's ability to contain the crisis persisted. Markets have whipsawed for months over fears of European debt contagion and hopes that officials will finally contain the long-simmering crisis.

Still, European shares closed higher and broad indexes on Wall Street climbed more than 1 percent after a weekend meeting of European policymakers buoyed hopes for a larger bailout fund and the injection of money into weaker banks.

But euro zone officials played down reports of nascent plans to halve Greece's debts and recapitalize European banks, saying no such plan is yet on the table.

"Europe is a day-to-day story, it seems like we flip-flop back and forth over whether Greece is going to get the bailout they want and how concerned the markets are about Greece," said James Newman, head of Treasury and Agency trading at Keefe, Bruyette and Woods in New York.

"I don't see that ending any time soon," he said.

The euro extended losses and damped risk appetite after data showed U.S. new home sales fell 2.3 percent in August to a six-month low, a fresh sign of the struggling housing market -- a pillar of the U.S. economy.

The euro rebounded at midday to trade near break-even at $1.3507.

MSCI's all-country world equity index .MIWD00000PUS was little changed, down 0.01 percent.

The FTSEurofirst 300 markets/index?symbol=gb%21FTPP">.FTEU3 added 1.7 percent, following a 0.8 percent gain on Friday.

A broad measure of the U.S. stock market, the S&P 500 index, climbed into positive territory after an early loss, as did the tech-rich Nasdaq, while the Dow traded higher.

After three hours of trading, the Dow Jones industrial average finance/markets/index?symbol=us%21dji">.DJI was up 143.42 points, or 1.33 percent, at 10,914.90. The Standard & Poor's 500 Index .SPX was up 9.96 points, or 0.88 percent, at 1,146.39. The Nasdaq Composite Index .IXIC was up 1.00 points, or 0.04 percent, at 2,484.23.

Government debt prices on both sides of the Atlantic fell on reports the European Union was looking at boosting the region's 440 billion euro rescue fund and other ways to avert a Greek debt default.

The benchmark 10-year U.S. Treasury note was down 18/32 in price to yield 1.89 percent. The December Bund future shed 72 ticks to 137.40.

Brent and U.S. crude oil futures turned positive in volatile trading as the U.S. dollar weakened against a basket of currencies, improving investors' risk appetite.

Brent crude oil slipped below $104 a barrel as investors worried European governments and banks would be unable to resolve the euro zone debt crisis and avert wider financial contagion.

Brent futures for November rose 62 cents to $104.59.

U.S. light sweet crude oil rose 52 cent to $80.37 a barrel.

"These are very critical days and weeks ahead, reminiscent very much of the touch-and-go situation we were in back in 2008," said Edward Meir, senior commodities analyst at brokers MF Global. "The key difference this time around is that it is countries and not companies that are in danger of going bust."

Gold futures fell, on course for their largest monthly slide in three years as investors scrambled for cash in the face of mounting fear over the impact of a potential Greek default.

Spot gold prices fell $55.30 to $1,599.90.

 

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[EmpireGlobalfx]

European shares climb on euro zone debt plan hopes

(Reuters) - European shares climbed to their highest in nearly a week on Tuesday on renewed hope that European policymakers will act to contain Greece's debt problems and resolve a regional debt crisis threatening to derail the world economy.

Financials, previously hard hit because of their exposure to peripheral euro zone economies, were among the top gainers, with the STOXX Europe 600 banking index .SX7P up 3.6 percent and insurers .SXIP up 4 percent. The indexes are still down 32 percent and 19 percent, respectively, in 2011.

"Given so much uncertainty at the moment, there is room for both pessimism and optimism. The optimists have taken the forefront on hopes that we could see European politicians getting to grips with the current situation over the coming weeks," said Keith Bowman, analyst at Hargreaves Lansdown.

"But there are still a lot of concerns. Investors remain skeptical about the success of the measures being planned to resolve the euro zone credit crisis."

Thomson Reuters Datastream data also highlighted weak investor sentiment, with the ratio of put/call open interest on the Euro STOXX 50 markets/index?symbol=de%21SX5E">.STOXX50E -- down to 1.1139 to hover near a 10-month low -- showing that investors still have little faith in the rebound.

However, the FTSEurofirst 300 finance/markets/index?symbol=gb%21FTPP">.FTEU3 was up 2.3 percent at 918.57 at 0859 GMT, after hitting 921.63, the highest since September 21. It gained 1.8 percent on Monday on talk policymakers were drawing up plans to boost the size of the regional bailout fund, halve Greece's debts and recapitalize banks.

Despite the rally, the 30-day implied volatility for many European indexes rose, indicating investors' wariness of the situation.

The market awaited a policy meeting of the European Central Bank next week, with ECB officials saying on Monday they were keeping their options for a rate cut open. There were signals the bank could start offering 12-month, limit-free loans to banks again.

Auto shares rose on hopes a solution for the euro zone crisis could bring the global economy back on track and improve demand for vehicles. The sector index .SXAP rose 4.3 percent, while Daimler (DAIGn.DE) gained 5.1 percent after Credit Suisse upgraded its stock to "outperform" from "neutral."

KEY TECHNICAL LEVELS

The Euro STOXX 50 .STOXX50E, the euro zone's blue-chip index, was up 2.9 percent at 2,142.57 points, after climbing to its highest in more than a week earlier in the session.

Analysts said the index was likely to stay in a 2,000-2,200 range in the coming session. If the price stays above 2,098 -- a gap on the daily candlestick chart -- on a sustained basis, the index could test 2,200.

"It is worth noting a possible double-bottom formation on the daily chart should the price recover above 2,200, which has the measuring targets at 2,343 and 2,436. It is important to watch the next three closes," Dmytro Bondar, technical analyst at RBS, said.

Charts indicated that if the index closed below 2,000 in coming days, the move could suggest a drop to 1,810.

Equity investors face two major headwinds -- the European sovereign debt crisis which undermines the banking sector, and the threat of a global economic slowdown, with the former affecting the banking sector and the latter hurting miners.

"While the European problem has a lower probability of materializing but a massive tail risk, the potential for a premature end to this global expansionary cycle is much more probable," said Lothar Mentel, chief investment officer at Octopus Investments, which manages nearly $4 billion.

"Long-term investors should not get too stressed by mistiming concerns, given risk assets are much, much cheaper than they have been, which is what counts rather than miraculously hitting the absolute low of markets in this cycle," Mentel said.

Europe's STOXX 600 index currently trades at 8.4 times its expected earnings, below a 10-year average of 13.2, according to Datastream. This compares with a price-to-earnings ratio of 11 for U.S. S&P 500 index .SPX.

 

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[EmpireGlobalfx]

Barroso comments lifts euro, risk appetite shaky

(Reuters) - The euro edged up against the dollar on Wednesday after a top EU official indicated more would be done to resolve the debt crisis but was vulnerable to selling in the absence of concrete steps to beef up region's rescue fund.

In his State of the Union address European Commission President Jose Manuel Barroso said he expected the European Central Bank would ensure the stability of the euro area and indicated Greek banks could receive more help.

He also said the euro zone could issue jointly underwritten bonds once there was deeper integration.

The single currency rose to last trade up 0.2 percent on the day at $1.3623, and off a low of $1.3541. It pared some of the previous day's gains when it hit a high of $1.3668.

But market players warned the lift from Barroso's comments and a bounce the previous day on talk of proposals to leverage up the 440 billion euros European Financial Stability Facility, could just be temporary.

"Barroso sounded very optimistic but I don't think he will be able to give much lasting impetus to the FX market," said Lutz Karpowitz, currency analyst at Commerzbank.

"The recovery in euro/dollar and in equity markets amid speculation we might see leveraging of the EFSF was overdone. I cannot see how that proposal will work and there is likely to be some disappointment ahead in the market."

Event risk remains high for the euro this week, with the Finnish parliament voting on proposals to enlarge the EFSF as agreed back in July later on Wednesday, while Germany's parliament votes on Thursday.

Technical charts showed as long as the euro remained stuck below resistance at $1.3670/1.3710 the risk was for a break of $1.3540 support. A move below $1.3470 would open the door to new lows in the $1.3250/00 area.

YEN STRENGTH

Meanwhile, the yen rose, buoyed by Japanese fund repatriation and buying by Japanese exporters ahead of the quarter-end and the end of Japan's financial half-year.

The dollar slipped 0.5 percent to 76.42 yen, not far from a record low of 75.941 yen hit in August on trading platform EBS. Traders cited heavy system fund stops layered under 75.90 yen and real money stops under 75.70 yen.

The euro fell 0.3 percent to 104.13 yen paring some of the previous day's gains, when it climbed 1.1 percent. The euro had hit a decade-low versus the yen near 101.95 earlier in the week.

Some market players had been speculating Japan could intervene this week ahead of its financial half-year end, to offer some relief to Japanese exporters, which have been stung by the dollar's 5.9 percent drop versus the yen so far in 2011.

Tsutomu Soma, senior manager at Okasan Securities' foreign securities department in Tokyo said that while yen-selling intervention may be a possibility, it would probably only happen if moves in the yen turned particularly violent.

"If the dollar falls below its record low near 75.95 yen, triggers some stops and the move becomes volatile, I think there is the possibility of another one-off intervention," he said.

The Australian dollar edged 0.1 percent higher to $0.9911, although selling by model funds weighed on the currency, traders said. It struck a 10-month trough of $0.9622 earlier in the week.

The dollar index firmed slightly, up 0.15 percent at 77.618 as risk sentiment remained fragile.

Federal Reserve Chairman Ben Bernanke gives a speech at 2100 GMT and might offer some reaction to the market's mostly negative response to last week's Operation Twist. Any hint that even more easing is possible could help underpin risk appetite.

 

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Wall Street drops, led by commodities on economic fear

(Reuters) - Commodity-related stocks drove Wall Street lower on Wednesday as stiff declines in energy and metals prices underscored investor concerns about global economic weakness and Europe's raging debt crisis.

A sharp 7 percent dive in the price of copper, seen as a leading indicator for the economy, rattled investors and led to a drop of 4.5 percent in the S&P materials index. Freeport-McMoRan Copper & Gold Inc fell 7.3 percent to $32.29.

Investors were on a knife edge as inspectors from the EU and IMF headed to Greece to scrutinize austerity plans while German Chancellor Angela Merkel worked to defuse a revolt within her government ahead of a vote to expand Europe's bailout fund on Thursday.

Wednesday's declines put the S&P 500 on course for its worst quarter since the high noon of the financial crisis in the fourth quarter of 2008. The drop also illustrates how sensitive the market has become to news on Europe's troubles.

"There is certainly a lot of headline risk and a lot of weak hands that hold stocks after this big rally we've had in the last three days," said Robert Francello, head of equity trading for Apex Capital, a hedge fund in San Francisco.

"Traders who have either gotten long during the rally or covered their shorts are probably going just to flatten themselves out, either taking profits or getting out of the market," he said.

Brent crude resumed its downward trend, falling more than $3 in afternoon trade, sending an S&P index of energy stocks down 3 percent. Chevron fell 1.9 percent to $91.74.

News early in the afternoon that bans on short-selling stocks in France, Italy and Spain have been extended highlighted the regulatory risk faced by investors and increased selling pressure.

The Dow Jones industrial average dropped 179.79 points, or 1.61 percent, to 11,010.90. The Standard & Poor's 500 Index dropped 24.32 points, or 2.07 percent, to 1,151.06. The Nasdaq Composite Index dropped 55.25 points, or 2.17 percent, to 2,491.58.

Traders said volume would likely be light and market movements accentuated during the rest of the quarter due to the Jewish New Year holiday of Rosh Hashanah.

So far, the S&P 500 has fallen 12.8 percent this quarter, its worst decline since the fourth quarter of 2008 when it fell 22.6 percent.

In the commodities sector, Cliffs Natural Resources Inc sank 8.4 percent to $55.66. Gold prices fell more than 2 percent.

"It's fear of a global slowdown," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "It's a pure flight to safety into the dollar here, and that's killing commodities."

A push to solidify a euro-zone rescue fund and alleviate the region's sovereign debt crisis lifted stocks on Tuesday for a third consecutive session, following four straight days of losses for the benchmark S&P 500. The S&P gained more than 4 percent over that three-day period.

Amazon.com Inc gained 2.5 percent to $229.71 after it unveiled a new tablet computer with a $199 price tag. Apple Inc, which makes the popular iPad tablet, fell 0.6 percent to $397.01.

Microsoft Corp dipped 0.4 percent to $25.58 after Samsung Electronics Co Ltd unveiled software pacts with the company.

In earnings news, Jabil Circuit Inc advanced 8.2 percent to $18.81 a day after reporting fourth-quarter earnings that beat expectations, while Family Dollar Stores Inc fell 1.6 percent to $53.31 after its results.

In economic news, orders for long-lasting U.S. manufactured goods slipped in August on weak demand for motor vehicles, but a rebound in a gauge of business spending suggested the economy would avoid another recession.

About five stocks fell for every one that rose on both the New York Stock Exchange and the Nasdaq. About 7.96 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, in line with this year's average.