GLOBAL MARKETS-U.S. stocks, euro lower; risk tolerance declines

Tue Nov 27, 2012 11:01am EST

* U.S. shares fall on 'fiscal cliff' fears
    * Europe and Asia shares rise; Greek debt deal helps
    * Euro falls after hitting one-month high

    NEW YORK, Nov 27 (Reuters) - U.S. stocks fell on Tuesday,
reversing a positive trend for stocks elsewhere in the world,
and the euro slipped as worry over the threat to the world
economy posed by the U.S. "fiscal cliff" offset optimism from a
deal to ease Greece's debt burden.
    Shares globally had climbed earlier and safe-haven German
bonds fell after global lenders reached a new deal to reduce
Greece's debt and release loans needed to keep the country
afloat.
    But as Democrats and Republicans prepared to resume budget
negotiations in Washington, investors in U.S. stocks took a
second look at risk.  
    U.S. data failed to allay concerns. A gauge of planned U.S.
business spending increased by the most in five months in
October, but a fourth straight month of declines in shipments
underscored the damage inflicted by fears of tighter fiscal
policy next year.. 
    "For those of us that are worried about the economy in 2013,
given the uncertainty of the fiscal cliff, this is a little bit
helpful," said Hugh Johnson, chief investment officer of Hugh
Johnson Advisors LLC in Albany, New York. "But that doesn't
remove the overarching worry about the 'cliff' or that tax
policy and spending policy will not be right, given the weak
economy."
    The Dow Jones industrial average was down 40.59
points, or 0.31 percent, at 12,926.78. The Standard & Poor's 500
Index was down 3.60 points, or 0.26 percent, at 1,402.69.
The Nasdaq Composite Index was down 6.21 points, or 0.21
percent, at 2,970.58. 
    The MSCI index of global stocks was last
down 0.2 percent. European shares on the FTSEurofirst 300 index
 were up 0.2 percent and MSCI's broadest index of
Asia-Pacific shares outside Japan gained 0.6
percent to a near three-week high.  
    Greece remained dominant in the headlines. After 12 hours of
talks, international lenders decided on steps to cut Greek debt
to 124 percent of gross domestic product by 2020 and promised
further measures to lower it below 110 percent in 2022.
 
    Following months of jockeying, the deal was broadly expected
by markets and clears the way for Greece's euro zone neighbors
and the International Monetary Fund to disburse almost 35
billion euros of aid next month.
    But with doubts about Greece's ability to hit its growth and
debt-reduction targets, few analysts expect the latest agreement
to be the final chapter in the euro zone's three-year crisis. 
    The euro touched $1.3009 earlier in the global day,
its highest level since Oct. 31, but lost momentum as caution
set back in and was last down 0.4 percent at $1.2923.    
    "Now that Greece is out of the picture for the moment, the
U.S. fiscal slope is front and center," said Christopher
Vecchio, Currency Analyst at DailyFX in New York.
    Michael Hintze, founder and CEO of hedge fund CQS, told a
Reuters summit he expected the euro zone to continue muddling
through its troubles. But added that "the chances of misstepping
on the way through are pretty high."          
 
    
    DEBT TALKS
    Safe-haven German government bonds fell following the Greek
deal, with benchmark Bunds yields at 1.427 percent
. Ten-year Greek yields were last at
15.833 percent. 
    The benchmark 10-year U.S. Treasury note was up
5/32, the yield at 1.6489 percent. 
    "Too much (of the deal) has been anticipated, It's not a
real game-changer. We expect some upside pressure on Bund yields
but not a sustained sell-off," said Michael Leister, a senior
rate strategist at Commerzbank in London.
    "(The Greek deal) is not the green light for a sustained
rally for risk assets across the board. As we've seen before,
once the market starts scrutinizing some of the details, some
doubts may well arise," he added.  
    Uneasiness about U.S. and Greek finances were offset by the
encouraging data on the U.S. economy.
    U.S. consumer confidence rose to a four-and-a-half-year high
in November as consumers became more optimistic about the
economic outlook, according to a private sector report released
on Tuesday.  
    The Greek agreement helped copper to a three-week high
 before it gave up gains, while Brent crude 
retreated to under $110 a barrel as Greek optimism was countered
by worries over the looming U.S. fiscal situation. U.S. crude
oil futures fell 0.6 percent to $87.26.
    After an initial post-Greek deal jump, gold fell to
$1,743.71 an ounce, down 0.3 percent.