Stocks fall on growth concern; euro slips

By Wanfeng Zhou

NEW YORK (Reuters) – Major stockmarkets slipped for a fourth day early Monday on concerns about slowing global economic global growth, while the euro slipped after a German official suggested a second Greek bailout was not yet certain.

Crude oil prices fell ahead of an OPEC meeting later this week, weighed by growing signs that high prices are destroying energy demand in the west.

Friday’s weak U.S. labor and manufacturing data pushed the benchmark S&P500 stock index to it’s fifth weak of losses, but the index is still up nearly 3.0 percent for the year. following a recent string of soft data highlighted by Friday’s disappointing jobs report, pushing the S&P 500 index to five weeks of losses.

The Dow Jones industrial average was off 7.68 points, or 0.06 percent, to 12,143.58 early Monday. The Standard & Poor’s 500 Index fell 1.88 points, or 0.14 percent, to 1,298.28 and the Nasdaq Composite Index gained 1.71 points, or 0.06 percent, to 2,734.49.

The FTSEurofirst 300 traded down 0.5 percent at 1,106.69 points.

“All in all, the big picture isn’t rosy. There is no durable economic growth in developed countries, there’s a risk of overheating in China and there’s also the inflation issue. Sentiment is not really positive on the market at the moment,” said Arnaud Poutier, co-head of IG Markets France.

World stocks, as measured by the MSCI world equity index fell 0.2 percent. The Thomson Reuters global stock index dropped 0.4 percent. Emerging market stocks shed 0.2 percent.

 

SECOND GREEK BAILOUT NOT CERTAIN

The euro last traded 0.1 percent lower at $1.4616, after dipping below $1.46 after a spokesman for the German finance ministry said a second aid program was not yet certain.

Policymakers have inched toward a new bailout package for Greece that German media said could exceed 100 billion euros, and that helped the euro hit a one-moth high of $1.4658.

Traders said the market assumes a deal will be reached to allow Greece more time to repay its debt and that markets also were already bracing for European Central Bank President Jean-Claude Trichet to signalThursday plans to raise euro zone interest rates in July.

“The focus will turn toward interest rate differentials, and with the Federal Reserve unlikely to do anything this year, an ECB rate hike will pull money toward the euro and other currencies,” said Boris Schlossberg, head of research at GFT in New York.

Greece’s cabinet will debate the austerity plans Monday as popular protests swell and Prime Minister George Papandreou seeks to avoid the fate of socialist peers in bailed-out peripheral peer Portugal, which voted in a new centre-right government Sunday.

Brent crude oil was last down 63 cents at $115.21, while U.S. crude fell 70 cents at $99.46 a barrel.

An OPEC meeting this week could see the group lift its oil production targets, although leading member Saudi Arabia is likely to face tough opposition in its push to raise supply from hawks Venezuela and Iran.

Concerns about the economy fueled fresh gains for gold, with spot gold at around 1,546 an ounce and targeting technical resistance at around $1,550 an ounce. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ On government debt markets, U.S. 30-year Treasury bonds traded over a point lower in price as investors pushed to cheapen government debt heading into the auction of $66 billion of notes and bonds this week.

The 30-year bond was trading 1-1/32 lower in price to yield 4.29 percent, up from 4.23 percent late on Friday, while benchmark 10-year Treasury noteswere 13/32 lower too yield 3.04 percent from 2.99 percent.

Greek two-year yields were 34 basis points lower on the day at 23.26 percent, as a second aid package for Athens looked likely. But with bid/ask spreads steady at more than 300 bps, investors were not rushing to buy. Five-year credit default swaps were up 15 bps at 1,385 bps, according to Markit. (Additional reporting by Edward Krudy, Steven C. Johnson and Chris Reese in New York, and Simon Jessop and Jessica Donati in London; Editing by )