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New York - The euro weakened to a near 16-month low against the dollar and global stocks fell on Wednesday after Fitch Ratings warned that the European Central bank needs to do more to avert a collapse of the troubled eurozone currency.
Oil prices also declined as investors, reminded once again of Europe’s debt troubles, rushed into the perceived safety of gold and sovereign bonds issued by the United States and Germany.
The euro fell 0.8% to $1.2672, closing in on a 16-month low of $1.2666 set on Monday, after Fitch’s head of sovereign ratings said the ECB needs to ramp up its buying of euro zone debt to support Italy and prevent a “cataclysmic” collapse of the currency.
It briefly trimmed some losses after a French Treasury source said the government had not been informed of any imminent decision on its credit ratings. Talk of a downgrade of France’s triple-A rating also weighed on investor sentiment.
A pledge by German Chancellor Angela Merkel that Germany would pay more capital into the European Stability Mechanism fund, once it is launched later this year, also prevented a stronger sell-off in the euro, traders said.
“The Fitch news rattled the market, and Merkel’s comments offset that temporarily, but overall the main focus remains on this week’s ECB meeting and debt auctions,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Global stocks fell 0.5% according to the benchmark MSCI All-Country World Index, and major Wall Street indexes slipped after hitting a five-month high on the previous session.
The Dow Jones industrial average was down 50.59 points, or 0.41 percent, at 12,411.88. The Standard & Poor’s 500 Index was down 3.78 points, or 0.29 percent, at 1,288.30. The Nasdaq Composite Index was up 0.63 points, or 0.02 percent, at 2,703.13.
Energy stocks dragged the Dow and the S&P lower as U.S. crude oil prices fell 1.5 percent to $100.70 per barrel. Oil fell more after a report from the Energy Information Administration showed stockpiles rose in the United States last week.
U.S. Treasuries prices rallied as investors sought protection, driving 30-year yields below 3 percent and five-year yields to 0.82 percent, their lowest intraday level since Dec. 20. German Bund futures hit their highest since Nov. 10 at 139.34.
“The Europe situation is really driving the market. This is clearly a cause of concern in the marketplace,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.
Gold prices rose for the second consecutive session to a one-month high of $1,646.90 an ounce, boosted by evidence of strong demand from China. It last traded 0.64 percent higher, at $1,641.20 an ounce.
Oil prices also declined as investors, reminded once again of Europe’s debt troubles, rushed into the perceived safety of gold and sovereign bonds issued by the United States and Germany.
The euro fell 0.8% to $1.2672, closing in on a 16-month low of $1.2666 set on Monday, after Fitch’s head of sovereign ratings said the ECB needs to ramp up its buying of euro zone debt to support Italy and prevent a “cataclysmic” collapse of the currency.
It briefly trimmed some losses after a French Treasury source said the government had not been informed of any imminent decision on its credit ratings. Talk of a downgrade of France’s triple-A rating also weighed on investor sentiment.
A pledge by German Chancellor Angela Merkel that Germany would pay more capital into the European Stability Mechanism fund, once it is launched later this year, also prevented a stronger sell-off in the euro, traders said.
“The Fitch news rattled the market, and Merkel’s comments offset that temporarily, but overall the main focus remains on this week’s ECB meeting and debt auctions,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Global stocks fell 0.5% according to the benchmark MSCI All-Country World Index, and major Wall Street indexes slipped after hitting a five-month high on the previous session.
The Dow Jones industrial average was down 50.59 points, or 0.41 percent, at 12,411.88. The Standard & Poor’s 500 Index was down 3.78 points, or 0.29 percent, at 1,288.30. The Nasdaq Composite Index was up 0.63 points, or 0.02 percent, at 2,703.13.
Energy stocks dragged the Dow and the S&P lower as U.S. crude oil prices fell 1.5 percent to $100.70 per barrel. Oil fell more after a report from the Energy Information Administration showed stockpiles rose in the United States last week.
U.S. Treasuries prices rallied as investors sought protection, driving 30-year yields below 3 percent and five-year yields to 0.82 percent, their lowest intraday level since Dec. 20. German Bund futures hit their highest since Nov. 10 at 139.34.
“The Europe situation is really driving the market. This is clearly a cause of concern in the marketplace,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.
Gold prices rose for the second consecutive session to a one-month high of $1,646.90 an ounce, boosted by evidence of strong demand from China. It last traded 0.64 percent higher, at $1,641.20 an ounce.
