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New York - Concern about plans for a fundamental review of the bailouts given to Europe's high debtor nations hit European stocks on Monday and drove up the bond yields of troubled euro zone economies.
The euro itself rebounded from recent sharp losses. Commodity prices also firmed, bouncing back from their biggest weekly drop since 2008 as the dollar eased back.
But Wall Street recovered from recent losses, opening slightly higher. The S&P 500 was up 0.1%.
The European Union is looking to lower interest rates on bailout loans to Greece and Ireland and is working on a second rescue for Athens in a chaotic effort to prevent a disorderly debt restructuring.
Rumors about a full-on restructuring of Greek debt have roiled European markets for several weeks now. The calls for lower rates came after a select group of top euro zone policymakers held not-so-secret talks in Luxembourg on Friday.
Meanwhile, Standard and Poor's cut Greece's rating to B from BB- on Monday, dragging it further into junk territory over concerns that a debt restructuring is increasingly likely.
"In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds," the agency said in a statement, warning that more downgrades could come.
Yields on Greek and Portuguese debt rose, with five-year Greek paper offering around 22%.
By contrast, yields on core euro zone bonds fell as investors bought into their relative safety.
Traders said the market was reacting to "a lot of noise" - suggesting that investors wanted clarity on what was happening in the euro zone.
The S&P news pushed European stocks lower, with the FTSEurofirst 300 stock index down 0.6%. Banks, which are seen as exposed through Greek bond holdings, led the way down.
"This has potential to disrupt the market in the near term as it looks increasingly likely that we will see another adjustment package for Greece," said Klaus Wiener, chief economist at Generali Investments.
The MSCI all-country world stock index was down 0.5%.
The euro recovered from last week's steep drop, but nervousness around sovereign debt muted gains.
The rebound in various commodity prices after their rout last week also helped to pull up the euro from a three-week low.
The euro was up 0.1% at around $1.4325, after a 3.3% fall in the past two sessions took it to a three-week low around $1.4310.
Bargain hunting also helped oil prices rebound with Brent crude futures up $2.83 to $112.22 a barrel.
The euro itself rebounded from recent sharp losses. Commodity prices also firmed, bouncing back from their biggest weekly drop since 2008 as the dollar eased back.
But Wall Street recovered from recent losses, opening slightly higher. The S&P 500 was up 0.1%.
The European Union is looking to lower interest rates on bailout loans to Greece and Ireland and is working on a second rescue for Athens in a chaotic effort to prevent a disorderly debt restructuring.
Rumors about a full-on restructuring of Greek debt have roiled European markets for several weeks now. The calls for lower rates came after a select group of top euro zone policymakers held not-so-secret talks in Luxembourg on Friday.
Meanwhile, Standard and Poor's cut Greece's rating to B from BB- on Monday, dragging it further into junk territory over concerns that a debt restructuring is increasingly likely.
"In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds," the agency said in a statement, warning that more downgrades could come.
Yields on Greek and Portuguese debt rose, with five-year Greek paper offering around 22%.
By contrast, yields on core euro zone bonds fell as investors bought into their relative safety.
Traders said the market was reacting to "a lot of noise" - suggesting that investors wanted clarity on what was happening in the euro zone.
The S&P news pushed European stocks lower, with the FTSEurofirst 300 stock index down 0.6%. Banks, which are seen as exposed through Greek bond holdings, led the way down.
"This has potential to disrupt the market in the near term as it looks increasingly likely that we will see another adjustment package for Greece," said Klaus Wiener, chief economist at Generali Investments.
The MSCI all-country world stock index was down 0.5%.
The euro recovered from last week's steep drop, but nervousness around sovereign debt muted gains.
The rebound in various commodity prices after their rout last week also helped to pull up the euro from a three-week low.
The euro was up 0.1% at around $1.4325, after a 3.3% fall in the past two sessions took it to a three-week low around $1.4310.
Bargain hunting also helped oil prices rebound with Brent crude futures up $2.83 to $112.22 a barrel.
