New York / London -
Stocks fell on Wednesday as thin trading volumes discouraged investors
from resuming last week's rally while oil prices eased after Iran's
threat to close the Gulf was written off as rhetoric.
A strong sale of short-term
Italian debt brought some relief to European markets, giving a temporary
boost to the euro. Investors remained cautious, however, before a much
bigger sale of longer-term bonds by Italy on Thursday.
Key U.S. stock indexes fell, including a 1 percent decline by Nasdaq,
as investors awaited the beginning of 2012 to make any big bets. The
broad S&P 500 index erased its 2011 gains after just turning
positive during last week's rally.
The Dow Jones industrial average lost 80.26 points, or 0.65 percent, at 12,211.09. The Standard & Poor's 500 Index was down 10.03 points, or 0.79 percent, at 1,255.40. The Nasdaq Composite Index fell 24.63 points, or 0.94 percent, at 2,600.57.
Wall Street's decline weighed on European stocks, which erased earlier gains. The FTSEurofirst 300 index of top European shares fell 0.33 percent, after rising as much as 0.63 percent earlier.
The MSCI All-Country World index .MIWD00000PUS lost 0.83 percent, increasing losses in the year-to-date to 10 percent.
crude oil prices fell 1.15 percent to $100.17 a barrel. They had gained
more than a dollar in the previous session following a threat by Iran to stop oil shipments through the Strait of Hormuz if Western countries impose new sanctions on its exports.
faces the prospect of further sanctions from the European Union by the
end of January over its nuclear ambitions. Washington said it saw "an
element of bluster" in the threat to close the Gulf.
threat by Iran to close the Strait of Hormuz supported the oil market
yesterday, but the effect is fading today as it will probably be empty
threats as they cannot stop the flow for a longer period due to the
amount of U.S. hardware in the area," said Thorbjoern bak Jensen, oil
analyst with Global Risk Management.
Italy gets boost
euro briefly rose against the dollar after Italian short-term debt
costs halved at an auction, helped by a new government austerity package
and cheap liquidity from the European Central Bank.
euro edged up to a session high of $1.3080 after the Italian auction
but later reversed those gains to fall to 1.2955, 0.86 percent lower on
the day but still above the $1.2945 hit earlier in the month, its
weakest since January.
the more difficult task of selling long-term debt on Thursday, when it
will need greater commitment from international investors to place 8.5
billion euros of debt with maturities of up to 10 years.
auction is more important and will give more insight into general
sentiment. Today was a warm-up," said Neil Mellor, currency strategist
at Bank of New York Mellon.