By Michael P. Regan and Rita Nazareth
Dec. 20 (Bloomberg) -- The euro slumped and after Moody?s Investors Service downgraded some Irish lenders and debt securities. Boeing Co. led losses in the Dow Jones Industrial Average amid concern it will delay its 787 Dreamliner again.
The euro slid against 14 of 16 major peers at 11:36 a.m. in New York, falling as much as 1.2 percent to a record low against the franc. The Standard & Poor?s 500 Index was little changed after climbing 0.3 percent in the first 15 minutes of trading. Boeing tumbled as much as 3.4 percent after the Seattle Times reported that it will announce another delay to the 787.
The euro extended losses as Moody?s downgraded the state- controlled Anglo Irish Bank Corp. and Irish Nationwide Building Society to junk and reduced ratings on a variety of Irish covered bonds, or securities backed by cash flows from other debt. Intel Corp. also dragged on U.S. stock benchmarks following a Wall Street Journal report that it faces European antitrust scrutiny over its purchase of McAfee Inc.
?The market is vulnerable,? said Alan Gayle, senior investment strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees $52.5 billion. ?There?s still nervousness regarding the prospects for more downgrades in Europe. In the U.S., things are gradually getting better from both a corporate and economic standpoints. However, the global jitters will be around for a while and that increases the markets vulnerability to any piece of news.?
The S&P 500 retreated from its highest level since September 2008 as industrial and technology companies led declines among 10 major industry groups. The gauge is up more than 11 percent in 2010 amid improving corporate earnings and the Federal Reserve?s efforts to pump more cash into the economy.
The Stoxx Europe 600 Index rose 0.7 percent, paring an earlier gain of 1.1 percent. Volkswagen AG, Europe?s biggest carmaker, rallied 3.4 percent after saying it expects sales in China to grow 10 to 15 percent next year. Abertis Infraestructuras SA gained 1.7 percent following a Sunday Times report that CVC Capital Partners Ltd. may bid for the Spanish highway operator.
Banco Popolare SC climbed 5.5 percent, the first gain in eight days, after Goldman Sachs Group Inc. lifted its recommendation on the lender to ?neutral? from ?sell.?
Airline stocks retreated as snow in Europe disrupted air travel for a third day. British Airways Plc sank 1.6 percent, while Deutsche Lufthansa AG lost 0.6 percent.
The euro slid 0.8 percent against the yen, weakening to the lowest level in almost two weeks, and dropped 0.5 percent versus the dollar to $1.3125. The New Zealand dollar strengthened against all 16 of its most-actively traded counterparts, advancing 0.8 percent versus the U.S. currency.
The yield on the French 10-year bond declined seven basis points to 3.32 percent.
The similar-maturity U.S. Treasury yield fell eight basis points to 3.26 percent before the Federal Reserve buys as much as $17 billion of securities maturing between 2014 and 2020 as part of its so-called quantitative-easing program.
The MSCI Emerging Markets Index retreated 0.3 percent. China?s Shanghai Composite Index sank 1.4 percent, the biggest decline in almost three weeks, on speculation the government will raise interest rates to curb inflation.
Investors are too optimistic given the prospects for tighter monetary policy, Hao Hong, a Beijing-based equity strategist at China International Capital Corp., wrote in a report today.
The Hungarian forint weakened 1.4 percent against the euro, extending losses after the nation?s central bank raised its benchmark rate to 5.75 percent from 5.5 percent because of concern inflation will accelerate.
South Korea?s Kospi Index lost 0.3 percent, paring an earlier 1.5 percent decline, after the country conducted a live- firing drill without drawing retaliation from its northern neighbor.
--Editors: Michael P. Regan, Chris Nagi
To contact the reporters for this story: Michael P. Regan in New York at mregan12@bloomberg.net; Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net.
To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net.
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