* Euro falls to four-month low before reversing losses
* Portuguese 10-year yields above 7 pct on debt worries
* Debt concerns overshadow earnings hopes, stocks fall (Recasts; updates with U.S. markets close)
By Walter Brandimarte and Jennifer Ablan
NEW YORK, Jan 10 (Reuters) - World stocks fell on Monday on fears Portugal may be the next euro-zone member forced to seek a bailout, and the euro was seen remaining under pressure even as it managed to recover after hitting a four-month low against the dollar.
Prices of U.S. Treasury debt and gold rose as investors sought safety on a resurgence in worries about European debt ahead of key bond auctions by Portugal, Italy and Spain this week.
The euro's rebound was partially fueled by gains against the Swiss franc, on speculation the Swiss government may act to rein in currency gains. Talk of further bond purchases by the European Central Bank also took some pressure off the market.
Stocks fell in the United States, Europe and most emerging markets as the fears about European debt levels overshadowed news of multibillion-dollar mergers and acquisitions. Asian stocks were also poised to open lower, with front-month Nikkei 225 futures traded in Chicago NKH1 falling 25 points to 10,480.
"We see a further escalation in the European debt crisis, and a substantially weaker euro," said Stephen Jen, managing director of macroeconomics and currencies at BlueGold Capital Management LLP in London.
"There is no silver bullet because the underlying problems are 'knotted.'"
The euro fell as low as $1.2860 EUR= on trading platform EBS, a level not seen since mid-September, but recovered later to trade at $1.2949, up 0.26 percent on the day. It remains down more than 3 percent against the dollar so far this year.
European debt concerns rose again during the weekend after Reuters quoted a senior euro zone official as saying Germany and France were increasing pressure on Portugal to seek financial help from the European Union and International Monetary Fund. For details, see [ID:nLDE7080FG].
The report sent yields on Portuguese 10-year debt soaring above 7 percent to their highest levels since the euro's creation in 1999. Portuguese yields recovered some ground later on Monday on talk of ECB bond buying, but remained above 7 percent, which is seen as an unsustainable cost of borrowing.
Portugal denied it was under pressure from Berlin and Paris to seek a bailout. [ID:nLDE70808M]
"It highlights the problems of whether the bailout fund will be sufficient to meet everybody's expectations," said Mark Bon, fund manager at Canada Life in London, said of the reports on Portugal.
WORLD STOCKS WEAKER
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured site: So, Why is Wikileaks a Good Thing Again?.
No comments:
Post a Comment