GLOBAL MARKETS-Stocks slip on U.S. data, but euro up on IMF move

Tue Nov 22, 2011 2:15pm EST

* U.S. 3rd-quarter GDP growth revised down to 2 pct
 * Dow, S&P 500 slip; European stock index drops
 * Euro rallies against dollar after IMF offers new liquidity
 * Commodities gain as investors seek alternatives

    By Barani Krishnan
    NEW YORK, Nov 22 (Reuters) - Global stocks fell on Tuesday
after data showed the U.S. economy grew more slowly than
expected in the third quarter, while the euro rose against the
dollar after the IMF unveiled a new six-month liquidity line.
    The euro climbed to $1.3522 after the International
Monetary Fund beefed up its lending instruments and unveiled a
new six-month liquidity line. By doing this, the IMF was
offering "a short-term liquidity window" to countries at risk
from the euro-zone crisis.    
     Goldprices rose, as did prices of other
commodities like oil, coppergrainsas
investors looked for places to put their money besides stocks.
     Data showed the U.S. economy grew at a 2 percent annual
rate in the third quarter, below the government's initial
growth estimate of 2.5 percent and below expectations for a 2.5
percent reading.
    "U.S. economic data proved a huge miss, which does not
contribute to positive sentiment," said Michael Woolfolk,
managing director at BNY Mellon Global Markets in New York.
    In the European stock market, the FTSEurofirst 300 index ended down 0.6 percent at 914.19. An index of world
stocks, measured by MSCI shed 0.1 percent.
    The release of the minutes from the Federal Reserve's Nov.
1-2 policy-makers' meeting appeared to have little impact on
the markets.
    On Wall Street, stocks slipped as concerns lingered that
politicians on both sides of the Atlantic are failing to tackle
huge debt burdens.
    Late Monday, a special U.S. congressional committee said it
failed to reach a deal on reducing government deficits.
Investors are worried the stalemate will make it more difficult
to pass extensions of measures like payroll-tax cuts that could
help stimulate the economy.
    The Dow Jones industrial average lost 39.09 points,
or 0.34 percent, at 11,508.22. The Standard & Poor's 500 Index shed 2.37 points, or 0.20 percent, at 1,190.61. But the
Nasdaq Composite Index inched up just 0.97 of a point,
or 0.04 percent, at 2,524.11.
    The S&P, which had already fallen through a key support
level of 1,200, fell to around 1,181 before recovering in an
effort to stay above 1,187 -- the next technical support for
the index, which represents a 61.8 percent retracement of the
2011 high-to-low.
    Shares of computer and printer maker Hewlett-Packard Co slid 2.8 percent to $26.12. The stock fell 4 percent
earlier to become the Dow's worst performer after HP gave a
2012 profit outlook that was below consensus.
     Euro-zone banks increased their borrowing at the European
Central Bank to the highest level in two years on Tuesday.
    The euro saw volatile trading as Spain and Italy faced
borrowing costs viewed by many as unsustainable. With little
confidence in official efforts to build a bailout fund big
enough to rescue them, trust between banks holding their debt
vanished, causing lending to dry up.
    U.S. BOND PRICES DIP
    U.S. Treasuries' prices also edged lower despite the
disappointing data on third-quarter growth, as bond market
investors focused on underlying data showing weak inventory
accumulation amid sturdy consumer spending as indications that
growth would pick up in the current quarter.
    "Real final sales were up 3.6 percent so the engine of
growth continued to hum, and weakness in inventories should set
up a rebound that will boost overall growth to about 3 percent
in the fourth quarter," said Thomas Simons, money market
economist at Jefferies & Co in New York.
    The benchmark 10-year Treasury note dipped 2/32
in price, yielding 1.96 percent versus 1.95 percent on Monday.
    SPAIN PUTS STRAIN ON EUROPE'S BANKS
    Spain's Treasury paid the highest yields in 14 years to
issue short-term bills, heaping pressure on center-right Prime
Minister-elect Mariano Rajoy to soothe nervous markets by
fleshing out austerity plans following Sunday's emphatic
election victory.
    Money market funds have cut their total exposure to
European banks by 42 percent since the end of May, straining
those banks' funding capabilities and forcing them to go to the
European Central Bank as its lender of last resort for
short-term funds, according to a report from Fitch Ratings.
    The ECB's weekly limit-free handout of funding underscored
the widespread problems on Tuesday with 178 banks requesting a
total of 247 billion euros. That was the highest since
mid-2009.
    Three-month Euribor rates , traditionally the
main gauge of unsecured interbank euro lending and a mix of
interest-rate expectations and banks' appetite for lending,
fixed unchanged at 1.467 percent just before the results of the
ECB's operation.
    Six-month rates edged up to 1.695 percent
from 1.694 percent while 12-month rates were
fractionally higher at 2.030 percent, from 2.029 percent.
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