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Global stocks hit 1-month low

May 17 2011 16:46 Reuters

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New York - World stocks fell to a one-month low on Tuesday on lingering doubts over the global economic recovery and worries about the debt of peripheral euro zone nations, while oil was pushed down by demand concerns and a firm dollar.

Wall Street stocks opened lower after weak data on housing and industrial production added to concerns the recovery is taking longer than expected. The euro zone's blue chip Euro STOXX 50 index fell 0.6%, down for the fourth consecutive session, after the chairman of euro zone finance ministers suggested Greece's debt could undergo a "soft" restructuring.

World stocks as measured by MSCI were down 0.6%, with the index earlier hitting its lowest level since mid-April.

"The expected growth that was supposed to take place in housing this spring hasn't yet," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "If anything (the US data) should be negative for growth, negative for stocks, and positive for the dollar."

The Dow Jones industrial average lost 64.06 points, or 0.51%, to 12 484.31. The Standard & Poor's 500 dropped 3.61 points, or 0.27%, to 1 325.86. The Nasdaq Composite fell 11.62 points, or 0.42%, to 2 770.69.

Brent oil dipped below $110 a barrel while US crude brushed $96 a barrel ahead of weekly US data expected to show builds in US crude and gasoline stocks and as the dollar gained ground.

"There's a reassessment of the fundamentals, and there's a perception that the current price is too high," said Christophe Barret, oil analyst at Credit Agricole Corporate and Investment Bank. "With demand being affected by the high oil prices ... they have to correct."

The euro seesawed against the dollar as Eurogroup chairman Jean-Claude Juncker said there could be a soft restructuring of Greek debt, with support for the single currency coming from a solid response to a Spanish bond auction and a mixed German economic sentiment survey.

Lingering worries over Greece were keeping the euro on edge, with some traders expecting it to trade in a $1.40-1.4250 range in the next few days.

Copper was also dragged lower by the firmer dollar and worries over the economic recovery. Benchmark copper was at $8 808 a ton versus $8 839 at Monday's close.

Earlier, Japan's benchmark Nikkei average inched higher, helped by a weaker yen, but the gains were limited by a slide in the utility sector, dragged down by Tokyo Electric Power Co.

wall street  |  commodities  |  markets  |  currencies
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