Stocks, euro slide on economic growth jitters

By Herbert Lash

NEW YORK (BestGrowthStock) – The euro slid to a one-week low against the dollar and global stocks fell on Thursday over worries that belt-tightening in Europe will slow growth and on concerns the U.S. jobs outlook was still weak.

U.S. stocks (Read more about the stock market today. ) traded most of the session around break-even, but fell steeply in late trade to end down more than 1 percent.

A warning from the chief executive of Cisco Systems Inc (CSCO.O: ), the network equipment maker, about the impact of the weak U.S. jobs market on the economy underscored a bearish mood. Cisco’s stock fell 4.5 percent, making it the third-biggest drag on the Dow Industrials.

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

Investors’ aversion to risk increased after U.S. data showed only a slight decline in jobless benefits for American workers last week and an unexpected rise in those continuing to get benefits .

News from Europe painted a tough picture for future growth. Portuguese leaders agreed to tough new austerity measures, including higher taxes and wage cuts for civil servants while 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 0.74 percent at $1.2527, the day’s low, in late trading after equity markets closed.

MSCI’s benchmark all-country world equity index (.MIWD00000PUS: ) fell 0.5 percent.

On Wall Street, the Dow Jones industrial average (.DJI: ) closed down 113.96 points, or 1.05 percent, at 10,782.95. The Standard & Poor’s 500 Index (.SPX: ) shed 14.23 points, or 1.21 percent, at 1,157.44. The Nasdaq Composite Index (.IXIC: ) fell 30.66 points, or 1.26 percent, at 2,394.36.

Scepticism among some market participants about whether the European rescue package will even work darkened worries over the potential hit a recovering global economy will take from the belt-tightening in Europe.

“That there’s still this looming problem in Europe that’s going to take time is the negative,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco. “The question is how big of a negative is that really going to be.”

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 23/32 in price to yield 4.44 percent, while the benchmark 10-year U.S. Treasury note was up 9/32 price to yield 3.54 percent.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) up 0.64 percent at 85.374.

Against the yen, the dollar was down 0.49 percent at 92.71.

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.

Crude oil fell for the third straight session, dragged down by the economic concerns and rising U.S. inventories.

Front-month U.S. crude for June delivery settled down $1.25 to $74.40 a barrel, having earlier slid to $73.62, the lowest since February 12. U.S. crude prices have fallen in seven of the last eight sessions.

London Brent fell $1.09 to settle at $80.11 a barrel,

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.

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.

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(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)

Stocks, euro slide on economic growth jitters