* Stocks cut losses, on track to sharpest monthly loss since
* Report of IMF plan for Spain lifts market, after
depressing US data
* Euro turns positive on day
* U.S. Treasury yields hit fresh 60-year lows
By Barani Krishnan
NEW YORK, May 31 Stocks and commodities cut
their losses on Thursday and the euro turned positive after a
report of possible plans to help Spain deal with its banking
crisis eased some concerns about Europe.
Confidence remained fragile, however, after a spate of
worrying U.S. economic data. Demand for safe-havens stayed
strong, keeping U.S. benchmark bond yields at record lows.
Traders and investors also braced for Friday's monthly jobs
report from the U.S. government, which will follow Thursday's
disappointing data for May from a private payrolls processor.
Stocks pared losses after Dow Jones Newswires reported that
the European department of the International Monetary Fund had
discussed contingency plans for a rescue loan to Spain in case
the country is unable to bail out one of its largest banks.
The report - citing people involved in the handling of
Spain's debt crisis - came after an IMF spokesman told reporters
the fund was not in talks with Spain on possible financial
"Any plan that could help with capital will cause our markets
to rally as we're still so dependent on how the situation in
Europe plays out," said Neil Massa, senior trader at John
Hancock Asset Management in Boston.
The euro rose to $1.2365 per U.S. dollar after
hitting a 23-month low of $1.2335.
The mild recovery aside, the single curreny and equity
markets across the world were on course to their sharpest
monthly loss since September.
Wall Street's S&P 500 was down 6 percent for May. European
stocks were down 7 percent while global equities
showed a 10 percent drop.
"There's a lot of instability in the world, and along with
the weak economic signals there's going to be significant
volatility that I don't expect to end anytime soon," said Don
Steinbrugge, managing partner of Agecroft Partners in Richmond,
He added that if Friday's employment report from the
government was weaker than expected "it will definitely cause a
Investors got a hint of what was to come in Friday's jobs
report after private U.S. payrolls processor ADP said on
Thursday that private employers created 133,000 jobs in May,
fewer than the expected 148,000. New claims for unemployment
benefits rose by 10,000 for the fourth straight weekly increase.
Investors were also dismayed by a report on U.S. economic
growth and manufacturing in the U.S. Midwest that pointed to a
slowdown in the recovery. The Chicago Purchasing Managers Index
report came in well below expectations for May, sinking from
56.2 to 52.7 versus a consensus estimate of 56.5.
At 2:00 p.m., the Dow Jones industrial average was up
1.17 points, or 0.01 percent, at 12,421.03. The Standard &
Poor's 500 Index was down 2.73 points, or 0.21 percent,
at 1,310.59. The Nasdaq Composite Index was down 14.20
points, or 0.50 percent, at 2,823.16.
European stocks, tracked by the FTSEurofirst 300 index
, closed down down 0.5 percent. Global equities,
measured by an MSCI index, shed 0.2 percent.
NO ECB HELP
In Europe, ECB President Mario Draghi moved to rule out
hopes that the central bank may step in to help ease the
pressures in financial markets until EU leaders could agree on
measures to tackle the structural problems at the root of the
region's debt crisis.
"Can the ECB fill the vacuum of lack of action by national
governments on fiscal growth? The answer is no," Draghi told the
European Parliament. "Can the ECB fill the vacuum of the lack of
action by national governments on the structural problem? The
answer is no."
Concerns over Europe's debt crisis and the lack of a clear
policy response have been rising since Spain unveiled
unconvincing plans to recapitalise nationalised lender Bankia
, raising the possibility it could need outside help.
Those worries kept Spain's 10-year bond yields at around 6.6
percent, not far from Wednesday's euro-era high of
6.79 percent and close to the crucial 7 percent mark, which has
led to troubled nations like Portugal and Ireland needing
The flight away from Spanish debt and also Italian bonds,
which are under threat of contagion from Spain, has pushed up
demand for the safety offered by German government paper.
Germany's two-year bonds traded just above zero
percent on Thursday, while benchmark 10-year Bund yields
hovered around their record low of about 1.25
The U.S. benchmark 10-year Treasury note was up
10/32, with the yield at 1.5831 percent - lower than Wednesday's
1.6 percent levels, which already marked a 60-year bottom.
On the commodities front, oil's benchmark Brent crude in
London traded at around $101 per barrel, heading for a
15 percent loss on the month - its worst monthly performance
since December 2008.
Gold was near flat at around $1,563 an ounce,
although it was on target for a 6 percent monthly drop that
would mark its worst May in 30 years. Copper futures in London
closed at below $7,425 a tonne, down 11 percent for the