(Adds opening of U.S. markets; changes dateline; previous
By Chuck Mikolajczak
NEW YORK May 15 Investors flooded into
safe-haven benchmark U.S. and German government bonds and fled
equities worldwide on Thursday following mixed U.S. and weak
European economic figures.
U.S. stocks were nearly 1 percent lower, led by small-cap
issues. The Russell 2000 small-cap index was in
correction territory, having dropped more than 10 percent from
its record close earlier this year.
"Bonds are effectively acting as the parking place for
capital until we see more consistency and a more compelling
reason to put money to work in the (stock) market," said Peter
Kenny, CEO of Clearpool Group in New York.
Bond prices in Spain, Italy and other peripheral European
nations fell sharply, erasing early gains.
Those markets were rattled by comments from Slovak Prime
Minister Robert Fico, who said Russia's Vladimir Putin told
multiple European states that Moscow will not supply gas to
Europe as of June 1 if Ukraine does not pay its bills. However,
Moscow and Kiev have taken some tentative steps to resolve this
Yields on benchmark 10-year U.S. Treasury notes
fell as low as 2.47 percent, lowest since October 30. The U.S.
bond market earlier rallied in tandem with Europe's, bolstered
by weak euro zone growth that further cemented expectations the
European Central Bank will lower rates in June.
That turned to a safe-haven rally after the Putin news and
weak U.S. industrial production data and a fall in U.S.
U.S. stocks were weighed down by Wal-Mart Stores Inc
, which fell 2.6 percent after it forecast second-quarter
profit below analysts' estimates.
The Dow Jones industrial average dropped 157.72
points, or 0.95 percent, at 16,456.25. The Standard & Poor's 500
Index was down 19.80 points, or 1.05 percent, at
1,868.73. The Nasdaq Composite Index was down 46.78
points, or 1.14 percent, at 4,053.85.
Data showed the euro zone expanded by just 0.2 percent on a
quarter-over-quarter basis in the first three months of 2014.
European stocks declined 0.8 percent, erasing early
gains to a six-year peak.
The MSCI world equity index also fell 0.8
ECB President Mario Draghi signaled last week that the bank
was poised to ease monetary policy next month to support the
euro zone economy. Federal Reserve Chair Janet Yellen has also
suggested continued support for the U.S. economy.
The euro trimmed early declines and was down 0.1 percent to
$1.3698 after hitting a low of $1.3647, while Germany's
10-year Bund yield hit its lowest in a year at 1.30
(Reporting by Chuck Mikolajczak; Editing by Dan Grebler)