GLOBAL MARKETS-Shares fall on corporate outlooks, euro gains

Mon Oct 22, 2012 3:04pm EDT

* Euro gains after Spanish voting clears way to aid request

* Dollar hits 3-month high vs yen as Japan's exports tumble

* U.S. stocks slide on Caterpillar's outlook for global growth

* Oil prices retreat; Brent falls below $110 a barrel

By Herbert Lash

NEW YORK, Oct 22 (Reuters) - Global stocks fell on Monday on weak corporate results and outlooks, while the euro gained after a regional vote in Spain was seen as moving a solution to the euro zone debt crisis one step closer.

U.S. stocks slipped after heavy-equipment maker Caterpillar Inc slashed its 2012 forecast and warned that the global economy was slowing more quickly than it had expected.

Caterpillar's comment helped oil prices to retreat, and the S&P 500 index was on track for a third straight decline after it suffered its worst one-day fall since late June on Friday.

Peter Kenny, a managing director at Knight Capital in Jersey City, New Jersey, said with 15 days to go until the U.S. presidential election on Nov. 6, investors are hesitant, with the economy close to a stall and the euro zone still a concern.

"It's more of a wait-and-see. Once we have some clarity on the political front, I think people are going to be more than willing to put some bets on the table," Kenny said.

The Dow Jones industrial average was down 78.35 points, or 0.59 percent, at 13,265.16. The Standard & Poor's 500 Index was down 7.92 points, or 0.55 percent, at 1,425.27. The Nasdaq Composite Index was down 2.59 points, or 0.09 percent, at 3,003.03.

Shares of Caterpillar, considered a bellwether for the economy, rose and fell in rocky trade. Caterpillar was last up 0.8 percent at $84.52.

"Caterpillar is a cyclical stock, and there's always a battle between a slowdown in the economy and growth expectations," said Shawn Hackett, president at Hackett Financial Advisors in Boynton Beach, Florida. "The stock is extremely volatile during periods when the economic outlook is uncertain."

Caterpillar's lowered outlook helped push European shares lower as it echoed other corporate views in recent weeks. By the European market close, all STOXX Europe 600 sectors except financials were negative.

The news from the U.S. heavy equipment manufacturer "is being treated as more macro than just a set of company results, and with a lack of other news flow today, I think people are being cautious on the back of it," said Will Hedden, a trader at IG Markets.

In Europe, the FTSEurofirst 300 index of top European shares fell 0.4 percent to close at a provisional 1,107.42 points. The STOXX Europe 600 fell 1.1 percent.

European shares earlier had traded higher on renewed expectations Spain was moving closer to seeking a bailout, but the decline in U.S. equity markets pulled Europe down.

The euro rose after Spanish Prime Minister Mariano Rajoy's party retained an absolute majority in the parliament of his home region of Galicia on Sunday, a result seen as overcoming a hurdle to Spain's formally requesting a bailout.

According to European officials and analysts, Rajoy had wanted to wait until the election results. A bailout request would trigger the European Central Bank's bond-buying program aimed at lowering Spain's high borrowing costs.

The euro was up 0.3 percent against the dollar at 1.3051. The U.S. dollar index fell 0.07 percent to 79.627.

Oil prices edged lower in choppy trading as economic concerns, in addition to expected production and pipeline restarts, offset fears about Middle East turmoil and the potential threat to the region's supply.

The Caterpillar warning, along with data showing tumbling Japanese exports, weighed on crude oil, pushing Brent to below $110 per barrel.

Brent crude for December delivery was down 30 cents to $109.84 per barrel. U.S. oil settled down $1.32 at $88.73 a barrel.

U.S. Treasury prices fell, taking back a portion of Friday's gains.

The benchmark 10-year U.S. Treasury note was down 8/32 in price to yield 1.794 percent.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.