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While you were sleeping: Stocks slip, directions awaited

Tuesday 23rd February 2010

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Global stocks slipped amid uncertainty about the euro-zone’s plan to bolster Greece and ahead of Congressional testimony by Federal Reserve Chairman Ben Bernanke on the state of the US economy.

Bernanke will give testimony on Wednesday and Thursday.

In late morning trading on Wall Street, the Dow Jones Industrial Average was 0.2% lower, the Standard & Poor’s 500 Index was 0.23% lower and the Nasdaq Composite had dipped 0.25%.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ rose 2.5% to 20.52.

The Dow Jones Stoxx 600 ended 0.1% lower at 250.22. Across Europe, the UK’s FTSE 100 ended 0.5% down, while France’s CAC 40 slipped 0.16% and Germany’s DAX slid 0.35%.

Twenty-four European banks may need to issue about 240 billion euros ($US327 billion) annually for the next three years to fund existing and new businesses, as well as to meet the new Basel stable funding requirements, Citigroup said.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.01% to 80.56.

The euro declined 0.1% to $US1.3598, according to Reuters data. It was down 0.6% at 123.99 yen while the dollar was off 0.5% at 91.19 yen.

The worst may yet be ahead for the euro, according to a report by Bloomberg that derivatives traders are betting measures to rein in deficits in Greece, Spain and Portugal may push those countries back into recession.

The euro has dropped 6.1% since mid January. Of 41 strategists surveyed by Bloomberg, 36 forecast it being weaker than that level at some point this year. Median forecasts predict it will remain below $1.43 through 2012 and beyond. The consensus year-end forecast for 2010 is $1.41.

Forward contracts used to lock in interest costs show traders expect the three-month euro-denominated London interbank offered rate to be 1.45% a year from now, or about 0.17 percentage point higher than the dollar Libor forward rate, Bloomberg says.

U.S. Treasury bonds fell in early New York trade as traders prepared for an $US8 billion auction of 30-year TIPS inflation protected bonds later in the day.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.77% to 275.66.

US crude for March delivery, which expires on Monday, fell 7 cents to $US79.74 a barrel by 1624 GMT after hitting $US80.51 earlier - the highest for a front-month contract since January 13. Brent crude for April gave up 6 cents to trade at $US78.13 a barrel.

Copper fell more than 1% as Chinese traders and investors returned from their New Year break. Copper for three month delivery on the London Metal Exchange traded at $US7365 a tonne.

Copper futures in London are set to rise to $US8000 a metric ton on increased demand from China and a recovery in usage outside the Asian nation, according to Macquarie Group Ltd.

 

 

Businesswire.co.nz



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