* World stocks lower, while bond prices rise
* Euro zone PMI data raises question over economic recovery
* Brent crude oil prices jump on Iran supply worries
By Caroline Valetkevitch
NEW YORK, Feb 22 Global stocks eased and
the euro was little changed on Wednesday after data
showed the euro zone may be sliding toward recession and China's
new export orders shrank in February.
Brent crude oil prices climbed for a third straight day,
hitting their highest since May 2, as worries that Iran might
interrupt supply outweighed concerns about the health of the
A new wave of worries over Greece, after the initial relief
following Tuesday's approval of a second bailout package, added
to the uncertain tone for stocks and the euro and caused nervous
investors to step back into low-risk U.S. government debt.
Although approval of the 130 billion euro rescue deal meant
Greece has probably avoided imminent default, many analysts
doubt its finances can be put on a sustainable footing.
"While a Greek bailout has been reached over the long
weekend, the process of implementation and final hurdles still
pose significant risks," said Ian Lyngen, senior government bond
strategist at CRT Capital Group in Stamford, Connecticut.
"We're also reminded that even with a smooth execution of
the deal, it does very little to address the longer-term
competitive challenges facing the Greek economy," Lyngen added.
Global stocks, as measured by the MSCI global equity index
, were down 0.3 percent, while U.S. stocks edged
down slightly. The FTSEurofirst index of top European companies
ended down 0.8 percent.
The Dow Jones industrial average was down 13.21
points, or 0.10 percent, at 12,952.48. The Standard & Poor's 500
Index was down 2.69 points, or 0.20 percent, at 1,359.52.
The Nasdaq Composite Index was down 10.01 points, or
0.34 percent, at 2,938.56.
Financial stocks led losses on both sides of the Atlantic on
concerns over the possible impact from the euro zone debt
crisis. Shares of Greek banks listed in Athens slumped on
concerns they will have to raise more capital than expected. EFG
Eurobank, Alpha Bank and National Bank of
Greece lost from 12.7 to 17.1 percent. On Wall Street,
the S&P financial index was down 1.1 percent and the KBW
bank index fell 1.9 percent.
In the U.S. Treasury market, the benchmark 10-year note was
last up 14/32 in price, with the yield at 2.010 percent.
The euro was nearly flat against the dollar as
optimism about Greece's bailout deal gave way to concerns about
how the terms will be implemented. The yen skidded to a
seven-month low against the dollar, with more weakness expected
as recent monetary easing in Japan put pressure on the currency.
The February reading on the flash euro zone services
Purchasing Manager's Index (PMI) of 49.7 was below forecasts and
under the 50 level that signifies contraction.
The reading, along with signs of weakness in a similar index
for Germany, Europe's biggest economy, clouded optimism about
the resilience of the European economy to the region's crisis.
However, a separate survey showed France's manufacturing sector
managed a marginal but unexpected return to growth in the month.
A rise in factory orders across the 17-nation euro area in
December, led by an increase in new orders from Italian
factories, tempered the worries, although overall industrial
orders in the region were down 1.7 percent in December compared
with a year ago.
CHINA FEELS EURO ZONE EFFECT
China's new export orders shrank in February, the most in
eight months, a preliminary HSBC business survey showed, defying
expectations of a pick-up and giving a worrying sign of the
impact of the euro area debt crisis.
HSBC's February flash PMI, which showed the overall
manufacturing sector shrinking for the fourth-straight month,
suggested overseas demand was sliding even further.
China's economic growth is widely seen slowing in January to
March for a fifth consecutive quarter, prompting growing hopes
of further policy easing measures from China's central bank.
Despite the worries about the global economic outlook, Brent
crude oil climbed on worries that Iran's confrontation with the
West would heat up further after talks with U.N. nuclear
ICE Brent crude for April delivery rose to settle at
$122.90 a barrel, gaining $1.24, or 1.02 percent, the highest
for front-month Brent since May 2, 2011, when prices ended at
"We've got a tug of war here between Iran tensions and
slowing global economic growth," said Mark Waggoner, president
of Excel Futures in Bend, Oregon.
In the metals market, gold prices rose to a three-month high
as technical buying helped the metal reverse initial losses.
Spot gold was up 0.6 percent at $1,769.49 an ounce,
having earlier hit a three-month high of $1,771.80 an ounce.