Euro eases on Greek debt woes, global stocks flat

By Herbert Lash

NEW YORK (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) broadly on Wednesday as Greek borrowing costs hit 12-year highs on growing impatience over Greece’s festering debt crisis, while global stocks were flat despite strong U.S. corporate earnings.

The Dow and Nasdaq closed slightly higher while the S&P 500 edged down slightly as disappointing outlooks from health-care companies took the edge off another round of better-than-expected results from U.S. blue chips such as Apple Inc (Read more about Apple stock future.).

A report from the International Monetary Fund that the global economy is recovering from recession more quickly than expected and robust data on Chinese imports failed to overcome investors’ unease over the Greek debt saga.

The euro fell (Read more about the trembling euro. ) for the fifth day to a two-week low versus the U.S. dollar as the premium investors demand to hold Greek government bonds rather than German Bunds surged past 500 basis points.

Greece is still holding out to finance its debt through market issuance, but investors increasingly believe Athens will be forced to tap a joint European Union-IMF emergency loan package.

Investors’ and traders’ patience wore thin after Greece’s finance minister said EU-IMF talks will last two weeks and a joint text will be agreed by May 15.

Standard & Poor’s rating agency said it does not expect Greece to default.

The yield on 10-year Greek debt rose to 8.4 percent, up more than two and one-half percentage points since the start of 2010 and 2.5 times the 3.085 percent yield that Germany pays.

“Despite all the comments and help from the euro zone, EU and IMF, the markets remain much too skeptical,” said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

“The Europeans have been dragging their feet. The policy reaction has been pretty lackluster,” he added. “It calls into question investors’ confidence in the euro zone as a whole.”

The euro dropped 0.3 percent to $1.3393, after falling as low as $1.3359 earlier.

Longer-dated U.S. Treasury debt prices rose on persistent worries about the implications of Greece’s debt crisis.

Benchmark 10-year Treasury notes traded 14/32 higher in price to yield 3.75 percent.

Global stocks fell slightly. MSCI’s all-country world index (.MIWD00000PUS: ) was down 0.2 percent.

But U.S. banks helped buoy Wall Street after Morgan Stanley posted stronger-than-expected profits and its shares rose 4 percent. The KBW Banks index (.BKX: ) rose 0.9 percent.

The Dow Jones industrial average (.DJI: ) closed up 7.86 points, or 0.07 percent, at 11,124.92. The Standard & Poor’s 500 Index (.SPX: ) fell 1.23 points, or 0.10 percent, to 1,205.94. The Nasdaq Composite Index (.IXIC: ) inched up 4.30 points, or 0.17 percent, to 2,504.61.

“With all the good earnings we’ve had lately, you’re getting a bit of profit-taking,” said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois.

Other U.S. bellwethers whose earnings surprised on the upside included AT&T Inc (T.N: ), Boeing Co (BA.N: ), McDonald’s Corp (MCD.N: ) and diversified U.S. manufacturer United Technologies Corp (UTX.N: ), all of which are Dow components.

AT&T fell slightly, McDonald’s stock rose slightly and shares of Boeing and United Technologies gained almost 4 percent each.

Oil prices fell as a rise in U.S. crude and refined product inventories outweighed strong Chinese demand data and the resumption of European flights.

U.S. June crude futures settled down 17 cents at $83.68 a barrel, while ICE Brent crude settled up 90 cents at $85.70 a barrel.

Data showed China’s implied oil demand in March rose 12.3 percent from a year earlier, the seventh straight month of double-digit growth.

Copper ended little changed as spill-over support from precious metals and energy complexes stabilized prices. Strong data on Chinese imports helped turn around prices, with palladium gaining 2 percent to a two-year high.

China’s imports of refined copper surged 52.9 percent in March from the previous month, data showed.

U.S. gold futures for June delivery settled up $9.60 at $1,148.80 an ounce in New York.

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(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss, Gene Ramos, Chris Reese and Frank Tang in New York; Joanne Frearson, Ian Chu, William James, Joe Brock and Humeyra Pamuk in London; Writing by Herbert Lash; Editing by Leslie Adler)

Euro eases on Greek debt woes, global stocks flat