* Wall Street shares slip further after Wednesday slump
* Euro hits 2-month low after ECB holds rates steady
* U.S., German government debt prices firm
By Richard Leong
NEW YORK, Nov 8 Stocks on major markets fell
further on Thursday as investors focused on whether the United
States will tackle its fiscal problems, while the euro fell to a
two-month low after the European Central Bank refrained from
taking more action despite signs of further economic slowdown.
Despite U.S. lawmakers' pledges to avoid the automatic tax
rises and spending cuts due to start early next year, known as
the "fiscal cliff", doubts persisted as to whether Congress can
agree on a timely compromise.
Fears that the world's biggest economy may suffer a
recession in 2013 as a result of the sudden fiscal austerity led
to sharp falls stocks and crude oil prices on Wednesday.
"This gridlock adds to the uncertainty for markets. It shows
the difficult problems Washington faces won't get fixed anytime
soon," said Daniel North, chief economist at Euler Hermes ACI in
Owings Mills, Maryland.
However, U.S. stocks stabilized Thursday morning partly on
news of a rise in U.S. exports and a bigger-than-expected drop
in jobless benefit claims, though the jobless claims were
distorted by the storm that disrupted life in U.S. Northeast in
the past week.
On Wall Street, the three major U.S. stock indexes dipped in
late morning trade, reversing slight gain after a flat opening.
The Dow Jones industrial average was down 29.41
points, or 0.23 percent, at 12,903.32. The Standard & Poor's 500
Index was down 3.94 points, or 0.28 percent, at 1,390.59.
The Nasdaq Composite Index was down 10.81 points, or
0.37 percent, at 2,926.48.
Whole Foods Market Inc. reported income that matched
forecasts, but shares of the biggest U.S. natural and organic
grocery chain fell 4.4 percent to $91.69.
On Wednesday, the S&P500 stock index suffered its biggest
one-day percentage drop since June, and the Dow closed at its
lowest level since early August.
The FTSE Eurofirst 300 index of top European shares
was little changed at 1,098.34 on Thursday, holding steady after
logging its biggest one-day drop in two weeks on Wednesday.
FTSE component Siemens rose 2.1 percent at 80.53
euros a share after the German engineering conglomerate reported
a smaller-than-expected drop in profits and announced a
cost-saving plan worth 6 billion euros ($7.7 billion)
The MSCI world equity index was down 0.5
percent at 325.30 after Tokyo's Nikkei lost 1.5 percent.
The ECB left key interest rate at 0.75 percent,
disappointing some traders who had bet on more policy easing in
the wake of recent comments by President Mario Draghi on the
weak economic outlook and gloomy European Commission GDP
The absence of more ECB action spurred selling in the euro
, knocking it down to a two-month low versus the U.S.
dollar at $1.2719. It last traded at $1.2739, down 0.25 percent
for the day.
The euro had been under pressure before the ECB decision
even though the Greek parliament approved in the early hours of
Thursday an austerity package needed to unlock international aid
and avert bankruptcy, defying political rifts and violent
"The euro will continue to weaken because there is no
recovery in sight for Europe and the rest of the world continues
to slip," said Joseph Trevisani, chief market strategist at
Worldwide Markets, Woodcliff Lake in New Jersey.
Meanwhile, Spain, another heavily indebted euro-zone member,
sold 4.8 billion euros ($6 billion) of new debt, completing its
cash needs for this year. This meant Madrid can hold out longer
before asking for international aid.
The somewhat encouraging news in Europe curbed safe-haven
bids for U.S. and German government debt.
The yield on the benchmark 10-year U.S. Treasury note
held steady at 1.671 percent, while German Bund
futures were up 20 basis points at 142.96.
In commodity markets, crude oil retreated from its session
highs after tumbling more than $4 a barrel on Wednesday on
concerns about weak demand for fuel as the U.S. and European
economies face the risk of a protracted slowdown.
Brent crude was up 22 cents at $107.04 per barrel
after falling nearly 4.0 percent on Wednesday, its steepest drop
since December 2011. It was as high as $108.17 earlier.
U.S. crude rose 72 cents to $85.16, after losing
nearly 5 percent in the previous session, also its biggest slump
since December 2011.
Gold was on track for a fourth straight days of gains
on safehaven bids due to worries about the U.S. fiscal cliff and
Europe's debt crisis. Spot prices on the bullion was up 0.45
percent at $1,724.06 an ounce.