Global stocks zig-zag, dollar up on Greece worries

By Manuela Badawy

NEW YORK (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) faltered and the U.S. dollar rose against the euro on Monday as investors worried about the sustainability of the economic recovery in the wake of last week’s discount rate rise by the Federal Reserve.

Concern about Greece’s indebtedness weighed on the euro and supported the dollar as well.

U.S. Treasury bonds fell in early New York trade as traders prepared for an $8 billion auction of 30-year TIPS inflation protected bonds later in the day.

The Dow Jones industrial average (.DJI: ) was up 2.19 points, or 0.02 percent, at 10,404.54. The Standard & Poor’s 500 Index (.SPX: ) was down 0.54 points, or 0.05 percent, at 1,108.63. The Nasdaq Composite Index (.IXIC: ) was up 0.56 points, or 0.02 percent, at 2,244.39.

“Stocks have started to soften up and obviously the euro is still facing serious headwinds with regard to Greece,” said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey.

Overall world stocks hit 2-1/2 week highs on Monday but European shares dipped slightly with GlaxoSmithKline (GSK.L: ) hit by calls for a key drug to be withdrawn on safety grounds.

MSCI’s world equity index (.MIWD00000PUS: ) rose 0.57 percent while the FTSEurofirst 300 index (.FTEU3: ) lost 0.19 percent. The index is down 2.0 percent in 2010, partly on worries that China’s moves to slow its economy and a potential Greek debt default may slow world economic growth.

Emerging market stocks (.MSCIEF: ) rose 1.15 percent, while Shanghai stocks (.SSEC: ) finished the first trading day lower after a week-long break for the lunar new year holiday, as concerns persisted about further tightening in China’s monetary policy.

The U.S. dollar was down against major currencies as measured by the ICE Futures Exchange’s dollar index (Read more about the global trade. ) (.DXY: ) which was 0.09 percent at 80.580.

The euro was down 0.18 percent at $1.3592 as lingering worries about Greece’s public finances capped its gains, while the dollar was down 0.45 percent against the yet at 91.17.

Earlier in the trading day the euro was firmer against the dollar after Der Spiegel reported on Saturday that Germany’s finance ministry had prepared a bail-out plan for Greece under which countries using the euro would provide aid worth between 20-25 billion euros.

The U.S. dollar rallied last week after the Federal Reserve raised the discount rate that banks are charged for emergency loans. The timing of the move was a surprise, and investors took it as the beginning of the end of an easy money regime that has weighed heavily on the greenback.

Policy-makers quickly sought to dispel that notion, though, saying the benchmark federal funds rate, which is the Fed’s main monetary policy tool, will remain low for some time.

Fed Chairman Ben Bernanke is expected to issue similar reassurances in testimony before Congress later this week.

Stock Market Today

(Additional reporting by Steven C. Johnson)

Global stocks zig-zag, dollar up on Greece worries