Euro slides on growth fears

By Herbert Lash

NEW YORK (BestGrowthStock) – The euro slid to a one-week low against the U.S. dollar and global stocks faltered on Thursday over worries that growth in Europe will slow due to belt-tightening and on anemic U.S. jobs data.

U.S. Treasuries rose as losses in the euro and a struggling Wall Street enhanced the allure of safe-haven government debt.

An only slight decline in jobless benefits for U.S. workers last week and an unexpected increase in those continuing to get benefits underscored the difficulties still facing the American labor market. A drop in crude oil prices helped push energy shares lower.

Portuguese leaders agreed to tough new austerity measures on Thursday, including higher taxes and wage cuts for civil servants. In Spain, unions threatened a general strike to protest austerity measures there.

“Europe basically looks like a zombie economy and on top of it, you’re seeing a massive retrenchment in government spending,” said Jessica Hoversen, fixed income and currency analyst at MF Global in Chicago.

The euro was off 0.41 percent at $1.2569, after earlier falling to a low of $1.2540.

MSCI’s benchmark all-country world equity index (.MIWD00000PUS: ) rose 0.22 percent.

On Wall Street, the Dow Jones industrial average (.DJI: ) was down 21.99 points, or 0.20 percent, at 10,874.92. The Standard & Poor’s 500 Index (.SPX: ) was down 4.23 points, or 0.36 percent, at 1,167.44. The Nasdaq Composite Index (.IXIC: ) was down 13.10 points, or 0.54 percent, at 2,411.92.

Disappointment over the jobless data offset optimism from an agreement by German software company SAP AP (SAPG.DE: )to buy smaller U.S. rival Sybase Inc (SY.N: ) for $5.8 billion.

European shares ended slightly higher, with strong earnings from telcoms provider BT (BT.L: ) and grocer Sainsbury (SBRY.L: ) offsetting rising concerns that fiscal tightening in Europe could slow the region’s growth.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares closed 0.1 percent higher at 1,049.89 points after bobbing higher and lower throughout a volatile session.

Skepticism among some market participants that the European rescue package will even work darkened worries over the hit a recovering global economy will take from belt-tightening.

“People think that equities could blow any minute. Watch the euro and if it doesn’t hold $1.25, which has been huge support, there is going to be chaos,” said James Combias, head of government bond trading at Mizuho Securities USA in New York.

Portugal’s measures announced on Thursday are the latest in a coordinated push in the euro zone that has so far calmed the worst fears of Greek-style debt contagion spreading in Europe.

The euro zone’s debt debacle has been a boon for safe-haven bonds recently, with investor nerves still frayed despite a 750 billion euro ($950 billion) rescue plan agreed to over the weekend and tough budget talk from Portugal and Spain.


The 30-year U.S. long bond rose 14/32 in price to yield 4.45 percent, while the benchmark 10-year U.S. Treasury note was up 6/32 price to yield 3.55 percent.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) up 0.36 percent at 85.134.

Against the yen, the dollar was down 0.55 percent at 92.66.

U.S. crude oil prices pared losses after the benchmark U.S. crude contract slid to a three-month low below $74 a barrel on record stockpiles in the U.S. Midwest.

Rising global energy demand and hopes Europe’s debt crisis can be tackled have seen Brent rise for three of the last four days, but U.S. crude prices have been falling since Tuesday.

Crude stockpiles at Cushing, Oklahoma, the delivery hub for the U.S. contract, have risen for eight weeks to a record 37 million barrels, pushing U.S. crude to its steepest discount to Brent since the peak of the global economic crisis.

U.S. light sweet crude oil fell 23 cents to $75.42 a barrel, while Brent in London fell 1.06 percent to $80.34.

Asian stocks hit highs for the week on hopes over the austerity measures in Europe. Japan’s Nikkei (.N225: ) gained 2.2 percent to a one week-closing high, and the MSCI Asia ex-Japan index (.MIAPJ0000PUS: ) was 1.8 percent higher.

Stock Market Report

(Reporting by Leah Schnurr, Wanfeng Zhou, Burton Frierson and Herbert Lash in New York and David Sheppard in London; Writing by Herbert Lash; Editing by Leslie Adler)

Euro slides on growth fears