GLOBAL MARKETS-U.S. worries hit shares, euro subdued after Greek deal

Wed Nov 28, 2012 7:28am EST

* European shares fall 0.2 percent
    * Investors focus on U.S. fiscal risks, Greek uncertainty
    * Commodities ease on worry over U.S. growth
    * Euro down, dollar falls vs yen

    By Marc Jones
    LONDON, Nov 28 (Reuters) - Shares, commodities and the euro
fell on Wednesday as investors fretted about a lack of progress
in U.S. budget talks and doubts crept in over Greece's new debt
deal
    U.S. Senate Majority Leader Harry Reid expressed
disappointment on Tuesday over the progress of talks between
Democrats and Republicans on avoiding the "fiscal cliff" - $600
billion in automatic tax rises and spending cuts due to start
early next year.
    This compounded investors' caution about the plan agreed by
Greece's lenders late on Monday to reduce its debts. The deal
opened the way for more aid to Athens to avoid a chaotic
default, but some details remain unclear and analysts worry it
will not do enough to make Greece's debt viable.
    The FTSEurofirst300 index of European stocks was 
down 0.2 percent by 1145 GMT, giving up almost all of the
previous session's gains. 
    London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX slipped between 0.1 percent and 0.3
percent and the MSCI index of global stocks was
down just over 0.2 percent following falls in Asian equity
markets.    
    "We have some aftermath effects of the Greek deal with
investors probably reconsidering some of their optimism and
focus is also shifting to the U.S. fiscal cliff issue," said
Joost Beaumont a senior economist at ABN Amro.
    "Risk sentiment has been a little bit hit by the comments by
Harry Reid overnight ... We expect there will be a deal but it
could be an 11th hour one which may not help confidence."
    
    CLIFF HANGER
    Futures prices  pointed to another soft open on
Wall Street. The main U.S. data of the day will be home sales
figures and the Federal Reserve's November "Beige Book" which
will provide the latest gauge of the economy.
    In currency markets, the euro was down 0.3 percent to
$1.2907 by 1100 GMT as traders continued to take profit on the
gains the currency made in the run up to the Greek deal.
 
    "The uncertainty brought by this (Greek deal) approach makes
European assets, including the euro, vulnerable to global growth
risks," Barclays Capital analysts said in a note. "For that
reason we think the European muddle through amplifies the
market's response to the fiscal cliff discussion in the U.S." 
    European Central Bank data added to the uncertainty, showing
depositors continued to pull money out of Spanish and Italian
banks in October, despite ECB President Mario Draghi's
conditional promise in September to help troubled euro zone
countries. 
    Away from Europe, the yen rose to 81.80 yen against the
dollar, as market players pared back expectations of aggressive
monetary easing by the Bank of Japan and the U.S. concerns
increased.
    The Japanese currency had lost about 4 percent against the
dollar over the past two weeks as investors started to price in
a possible shift in monetary policy after a Japanese election on
Dec. 16.
  
      
    COMMODITY SLIDE
    In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan fell 0.5 percent, retreating near
three-week highs, with materials and energy sectors
  leading the declines.
    Commodity markets also reflected the worries of a possible
U.S. budget crisis and how this could tip the world's biggest
economy into recession.
    Gold fell for a third straight day, copper 
dropped from a three-week high and Brent crude lost 29
cents to $109.58 per barrel.   
    "There is bearish sentiment caused by problems in U.S.
negotiations, with the fiscal cliff still looming," said Filip
Petersson, analyst at SEB in Stockholm.   
    Bond markets were sending more mixed signals, however.
    German government bonds firmed as the U.S. fiscal and Greek
problems attracted support for safe haven assets, but Italian
and Spain debt also rose as euro zone-focused investors closed
short positions on the bonds following Tuesday's Greek deal.
 
    "As long as that (the fiscal cliff) is in play we're not
going to see Bunds trade off too far ... given the growth
implications next year," one trader said.
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