* Global stocks fall on U.S. 'fiscal cliff' uncertainty
* Trading light ahead of early holiday close
* Crude oil lower, but yen jumps
By Ryan Vlastelica
NEW YORK, Dec 24 Global shares and commodities
were modestly lower on Monday as a continued deadlock in U.S.
budget talks left an undercurrent of uncertainty in markets
ahead of the Christmas break.
Volume was light going into the holiday, with many traders
already out on vacation. The U.S. stock and bond markets close
early, while a number of global markets, including those in
Germany and Italy, were closed.
The FTSEurofirst300 closed down 0.1 percent while
the MSCI index of global stocks was slightly
Global equities have been pressured by the political
stalemate with respect to the U.S. "fiscal cliff," a combination
of tax hikes and spending cuts scheduled to take effect next
year. Investors fear that if no deal is reached, it could push
the U.S. economy into recession, severely hurting global growth.
Some U.S. lawmakers expressed concern on Sunday that the
country would go over the cliff, and some Republicans charged
that was President Barack Obama's goal. Talks are stalled with
Obama and House of Representatives Speaker John Boehner out of
Washington for the holiday.
"This will continue to erode confidence and continue to
cause problems," said Joe Saluzzi, co-manager of trading at
Themis Trading in Chatham, New Jersey. "I am sure they will come
up with some patch like they always do... but it's concerning
that they can't get their stuff together."
Although there is no official date for talks to resume, the
two sides still have a few days after Christmas to find a
compromise before the Jan. 1 deadline when the measures start to
The Dow Jones industrial average was down 30.70
points, or 0.23 percent, at 13,160.14. The Standard & Poor's 500
Index was down 3.32 points, or 0.23 percent, at 1,426.83.
The Nasdaq Composite Index was down 7.66 points, or 0.25
percent, at 3,013.34.
Activity in other assets was also subdued, with spot gold
edging off a four-month low and February crude
futures down 0.2 percent. The benchmark 10-year
U.S. Treasury note was down 3/32, the yield at
For the year, the S&P 500 has risen 13.5 percent. In the
face of the budget uncertainty, many investors may opt to lock
in gains for the year until there is resolution on that front.
Most European bond markets were already shut for Christmas.
One of the few to be open was in Britain, where benchmark
10-year yields ticked higher.
Currency markets were also largely quiet. Against the
backdrop of the "fiscal cliff" uncertainty, the dollar
eased 0.1 percent versus a basket of major currencies while the
euro climbed 0.2 percent, back above $1.32.
The major mover was the yen, which jumped 0.6 percent
to 84.69 yen after incoming premier Shinzo Abe renewed pressure
over the weekend on the Bank of Japan to adopt a 2 percent
The uncertainty over the U.S. budget is threatening to sour
what has been a strong second half of the year for equity
markets. The FTSEurofirst 300 is up 20 percent since June while
the Euro STOXX 50 has gained almost 30 percent. Both
indexes are set to post their best annual performances since the
post-Lehman crisis bounce of 2009.
Investors are showing increasing appetite for European
stocks. EPFR Global data reported that flows into equity funds
have increased for the last 19 weeks.
"This year has been a year of transition, and now it's time
to turn the page and move on, to start picking stocks again for
the long term, companies exposed to the emerging consumer in
places like Asia and Africa," said David Thebault, head of
quantitative sales trading at Global Equities.
Others warn, however, that the euro zone crisis may still
have some bite left. Elections are due next year in Italy and
Germany, while Spain's government, companies and banks need to
refinance huge amounts of debt.
"Policymakers in Spain will not be looking forward to the
start of the year and January will probably be quite volatile in
Europe," said ABN Amro's Schuiling. "The funding in the first
quarter for Spain will be the test... Its deficit is now roughly
the same as Greece's."