Shares on Wall Street followed European shares lower Monday, as concerns over the euro zone debt crisis dampened the appetite for risk ahead of a flurry of bond auctions, and with caution prevailing as the next earnings season in the United States nears.
Traders also took in another round of mergers and acquisition, including Duke Energy?s $13.7 billion acquisition of Progress Energy, a tie-up that will create the country?s largest utility, and DuPont?s agreement to buy Danisco, a Danish specialty food ingredients maker, for $5.8 billion.
In early trading, the Dow Jones industrial average fell 52.15 points, or 0.45 percent, while the broader Standard & Poor?s 500-stock index lost 4.04 points, or 0.3 percent. The technology heavy Nasdaq declined 7.49 points or 0.3 percent.
In Europe, the FTSE 100 in London was 29.75 points, or 0.5 percent, lower, while the DAX in Frankfurt fell 79.45 points. or 1.1 percent, and the CAC 40 dropped 62.57 points or 1.6 percent.
European bond prices slipped again Monday as investors remained focused on financial uncertainties in the euro zone, notably whether Portugal can avoid turning to international lenders to finance its obligations.
?We probably won?t get clarity on what?s going to happen in Portugal for a while,? said Robert Pavlik, chief market strategist at Banyan Partners, who said that the uncertainty over Europe was causing traders ?to look past these acquisition deals.?
Several European officials stepped forward to deny reports in the German media over the weekend that Berlin and Paris have been pushing Portugal?s government, which has seen borrowing costs rise to unsustainable levels, to accept outside aid.
?We are not exerting pressure on anyone, but we defend the euro,? Wolfgang Sch�uble, the German finance minister, said in Berlin.
Investors will examine bond auctions in Portugal, Spain and Italy later this week for signs on whether indebted sovereigns will be able to raise funds at sustainable levels in 2011.
?There is enough in the background to remind investors that it?s not plain sailing and there clearly are risks about which are a source of instability for markets,? the chief strategist at Brewin Dolphin, Mike Lenhoff, said.
?But with the consensus for economic growth for the U.S. rising very rapidly, maybe that will ease some of the pressure and could be an important source of support for these markets.?
Merger and acquisition activity helped to limit losses as shares of Danisco soared 26 percent. Also on Monday, Playboy Enterprises said it had agreed to be taken private by Icon Acquisition Holdings, a partnership run by Hugh Hefner, in a deal valuing the company at $177 million. The offer price of $6.15 a share represents an 18 percent premium over Playboy?s closing price on Friday.
Investors were also cautious ahead of the earnings season in the United States, with the aluminum giant Alcoa scheduled to release results after markets close on Monday.
?It?s a typical thing to see investors removing a bit of risk off the table before the earnings season starts,? said Joshua Raymond, markets strategist at City Index. ?If we get a decent forecast-beating result from Alcoa, it could set a positive tone and entice investors to come back and buy from the lows in the market.?
Other American companies set to report this week include Intel and JPMorgan Chase.
Among individual movers, BP shed 2 percent after the Trans Alaska Pipeline, which carries oil for the company, was closed for a second day on Sunday because of a leak.
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