* World shares fall as euro plumbs new two-year lows
* Investors turn to safe-haven bonds, sending yields to new
* Oil falls about $4 a barrel
By Herbert Lash
NEW YORK, July 23 World equity markets sold off
and the euro plumbed to new two-year lows against the dollar on
Monday after reports that more indebted regions in Spain need
financial aid fueled fears that the country may need a bailout.
Investors fled to the perceived safety of safe-haven
government debt and the U.S. dollar as concerns about economic
growth, the plight of Spain and renewed market talk of a
possible Greek exit from the euro zone drove investment
Crude oil tumbled 3 percent, and yields on U.S., British and
German government debt hit record lows. But yields on government
debt in Spain set euro-era record highs, easing later in the
Five- and 10-year German government bond yields hit new lows
and U.S. Treasury-note yields hit their lowest since
the early 1800s. Ten-year U.S. Treasuries yields fell as low as
1.3977 percent, and last traded up 7/32 in price to yield 1.4347
Spanish media reported that up to six regions may seek aid
from the central government after Valencia asked for funds on
Friday. That request sent Spanish bonds to a euro-era high of
more than 7.5 percent, above the 7 percent level viewed as
How Spain's 17 indebted autonomous regions, locked out of
international debt markets, refinance 36 billion euros in debt
this year has been a major source of concern for investors ever
since they missed deficit targets last year.
The euro slid as low as $1.2067, its weakest since
June 2010, but later pared losses to trade about flat at
$1.2122. Against the yen, the euro was near a 12-year trough.
"The week is off to a challenging start as rising fears over
Europe push risk aversion higher," said Camilla Sutton, chief
currency strategist at Scotia bank in Toronto.
"Most of the focus is on Spain, with rising concern it too
will need to access financial aid," Sutton said.
The International Monetary Fund dismissed a weekend news
report that it may refuse to continue supporting Greece as it
prepares for talks with the new Greek government on its
Worry over Greece resurfaced with international lenders
scheduled to gather in Athens to discuss the terms of further
rescue payments after its prime minister said the country was
mired in a "Great Depression".
"All it does is it brings up that whole crisis again - all
that tells you it really didn't go away," said Ken Polcari,
managing director at ICAP Equities in New York.
U.S. stocks fell more than 1 percent, while equity markets
in Europe fell 2 percent or more.
The Dow Jones industrial average was down 147.88
points, or 1.15 percent, at 12,674.69. The Standard & Poor's 500
Index was down 18.40 points, or 1.35 percent, at
1,344.26. The Nasdaq Composite Index was down 52.76
points, or 1.80 percent, at 2,872.54.
The FTSE Eurofirst 300 index of top European shares
fell 2.3 percent to a provisional close of 1024.84 points, while
MSCI's emerging markets index was down 2.8 percent and
the all-country world equity index fell almost
Spain's main share index, the Ibex, closed down 1.1
percent, paring losses of more than 4 percent earlier in the
Highlighting Spain's urgent situation, the country must make
coupon and redemption payments to bondholders totaling 20
billion euros ($24.3 billion) next Monday.
Spanish Economy Minister Luis de Guindos has insisted Spain
does not need a full sovereign bailout, such as those for
Greece, Ireland and Portugal.
Oil prices briefly slipped below $103 a barrel.
Brent crude was down $3.27 at $103.56 a barrel,
while U.S. crude fell $2.95 to $88.88 a barrel.
The Reuters/Jefferies CRB Index of 19 commodities was
down 4.62 points, or 1.52 percent, at 299.95.
Spot gold prices fell $4.43, or 0.28 percent, to