* Euro hits record lows against several currencies
* Spanish 10-year bond yields climb above key 7 percent
* U.S. stocks fall; European shares slip from four-month
By Herbert Lash
NEW YORK, July 20 U.S. and European stocks fell
o n F riday and the euro hit record lows after Spain's heavily
indebted Valencia region asked for financial aid, increasing
investor fears that the Spanish government will seek a
Valencia sought help under an 18 billion euro ($22.1
billion) program passed o n T hursday that aims to bolster
Spain's IBEX stock index fell 5.8 percent, its
biggest one-day drop in two years, and the risk premium on
government debt hit a euro-era high as its borrowing costs rose
to 7.32 percent. That is above the 7 percent threshold
considered unsustainable, with little relief in sight.
"There is very little to stop Spanish bond (yields) moving
up at the moment, and that is a big concern," said Ed Shing,
head of European equity strategy at Barclays.
Martin Briggs, risk advisory consultant for global payments
company AFEX Markets Plc in London, called the euro "a slow
motion train crash that's happening in front of our eyes. No one
seems to have the will or the ability to make the tough
decisions that need to take place."
The euro plumbed record lows against the Australian,
Canadian and New Zealand currencies and hit multi-month lows
against the Norwegian and Swedish crowns. Against the yen, it
hit the lowest level in more than 11 years.
The euro fell as low as $1.2143, its weakest level
against the dollar since mid-June 2010. It last traded at
$1.2160, down 1.0 percent, as a sell-off against sterling and
the Swedish crown exacerbated the euro's slide.
U.S. stocks snapped a three-day winning streak while stocks
in Europe extended losses after the European Central Bank said
it would stop accepting Greek bonds as collateral, adding to
concerns about the euro zone debt crisis.
The FTSEurofirst 300 closed down 1.5 percent at
Banks and insurers, which stand to lose on
their sovereign bond holdings and loan books if the euro zone
crisis intensifies, were among the top decliners in Europe.
Banks fell 3.7 percent and insurers slipped 1.9 percent.
Spain's plight overshadowed another round of strong U.S.
corporate earnings, including better-than-expected profits at
General Electric and strong advertising revenue at Google
"The news from Europe continues to be a smoldering mess, and
it will be a long convoluted process before things are resolved
there," said John Kattar, who helps oversee $1.7 billion in
assets as chief investment officer at Eastern Investment
Advisors in Boston.
The Dow Jones industrial average ended down 120.79
points, or 0.93 percent, at 12,822.57. The S&P 500 Index
closed down 13.85 points, or 1.01 percent, at 1,362.66. The
Nasdaq Composite Index finished down 40.60 points, or
1.37 percent, at 2,925.30.
German bond prices and U.S. Treasuries rose as investors
clamored for safe-haven assets.
German 10-year bond yields fell 5 basis points
to 1.168 percent, and the benchmark 10-year U.S. Treasury note
was up 15/32 in price to yield 1.4584 percent.
The U.S. dollar index rose 0.7 percent to 83.476.
Oil fell below $106 per barrel at one point as a firmer
dollar spurred a dip from an eight-week high hit in the previous
session due to supply worries linked to tension in the Middle
East and hopes of an economic stimulus in the United States.
Brent crude fell 97 cents to settle at $106.83 a
barrel, but still posted a 4.33 percent weekly gain and has
risen about 16.5 percent over the past four weeks.
The expiring August contract for U.S. crude fell
$1.22 to settle at $91.44 a barrel. U.S. September crude
fell $1.14 to settle at $91.83 a barrel, but rose 4.98 percent
for the week.
A rally in soft commodities, which has pushed corn and
soybean prices to record highs, showed no signs of abating.
The Reuters/Jefferies CRB Index of 19 commodities was
down 0.40 point, or 0.13 percent, at 304.57.