Global stocks, euro decline as EU summit hopes slip
NEW YORK (Reuters) - U.S. stocks fell and the euro edged lower on Wednesday after optimism faded that European leaders will make substantial progress on resolving the euro zone debt crisis at their summit meeting this weekend.
The Federal Reserve's Beige Book report suggested the U.S. economic outlook grew dimmer in September, also sapping sentiment.
The European Union summit on Sunday has been billed as the forum at which the euro zone countries would make significant progress on expanding the EU bailout fund and recapitalizing banks.
But late in the New York session a report on the Wall Street Journal's website undermined hopes for progress at the EU leaders summit this weekend.
Plans to tackle the euro zone debt crisis have stalled with Paris and Berlin at odds over how to increase the firepower of the region's bailout fund, French President Nicolas Sarkozy told French lawmakers.
"At the end of the day, the market is nervous, waiting to see anything substantial coming out of the summit," said Tom Fitzpatrick, chief technical strategist at CitiFX in New York. "We are getting to a point that there have been so many false promises so they really need to deliver something big."
The Dow Jones industrial average .DJI fell 72.43 points, or 0.63 percent, to end at 11,504.62. The Standard & Poor's 500 Index .SPX was down 15.50 points, or 1.26 percent, at 1,209.88. The Nasdaq Composite Index .IXIC was down 53.39 points, or 2.01 percent, at 2,604.04.
The MSCI world stocks index .MIWD00000PUS was down 0.29 percent at 297.88,
Technology stocks were the biggest losers on Wall Street. Apple shares (AAPL.O) fell below $400 after the company's revenue and profits came in below estimates for the first time in years on Tuesday as it sold far fewer iPhones than expected.
A weaker U.S. economic outlook in September led businesses to be wary of spending and building up inventories ahead of the holiday sales season, the Federal Reserve said on Wednesday.
"Overall economic activity continued to expand in September, although many districts described the pace of growth as 'modest' or 'slight' and contacts generally noted weaker or less certain outlooks for business conditions," the findings compiled by the regional Fed Bank of Chicago said.
Earlier European shares ended higher, snapping two days of losses, led by bank stocks on hopes the European Union summit on Sunday would come up with a comprehensive plan to resolve the region's debt crisis. The European FTEurofirst 300 .FTEU3 index ended up 0.5 percent at 967.19.
EURO SLIPS, TREASURIES EDGE HIGHER
The euro lost early gains to end little changed against the U.S. dollar on Wednesday on renewed doubts about a resolution to the euro zone crisis.
The euro was last down 0.04 percent at $1.37480 after bouncing between $1.3735 and $1.3870 on the trading platform EBS. The euro had seen a four week high on Monday.
U.S. Treasury prices rose modestly on Wednesday. Benchmark 10-year Treasury notes traded 4/32 higher in price to yield 2.16 percent, down from 2.18 percent late Tuesday, while 30-year bonds were up 2/32 to yield 3.17 percent.
Crude oil futures slumped more than 2.0 percent on Wednesday, with an afternoon sell-off driven by concern about the euro zone debt crisis.
ICE Brent December crude fell $2.76, or 2.5 percent, to settle at $108.39 a barrel.
"The (oil) market is still totally dominated by Europe (and) talks that plans for the bailout package have stalled again kicked us right off the cliff," said Mark Anderle, trader at TAC Energy in Dallas, Texas.
Gold, meanwhile, fell for a third consecutive session, moving once again in tandem with riskier assets.
Spot gold was down 0.9 percent at $1,642.99 an ounce.