September 8, 2011 / 8:25 PM / 6 years ago

GLOBAL MARKETS-U.S. stocks slide on Bernanke; euro slumps

5 Min Read

  
 * Investors look to government, central banks for help
 * Fed's Bernanke pledges more aid but mum on details
 * Markets await Obama's jobs plan, doubts over feasibility
 * ECB rates unchanged, Trichet sees downside growth risks
 (Updates with markets close)
 By Richard Leong
 NEW YORK, Sept 8 (Reuters) - Wall Street stocks fell on
Thursday on disappointment that a speech by the Federal Reserve
chief lacked details on plans to spur economic growth, while
the euro declined on fears the euro zone debt crisis is
worsening with Greece failing to meet fiscal targets.
 Safe havens were still in favor with investors, as gold
prices rebounded after a two-day fall and German and U.S.
government bond yields edged closer to their historic lows.
 Fed Chairman Ben Bernanke said the U.S. central bank "will
do all it can" to boost economic growth and reduce
unemployment, but he did not disclose what monetary tools the
Fed might use. For details, see [ID:nW1E7IR02M]
 "The markets are going to be disappointed in this and
concerned that the Fed is only acknowledging the problems
without offering any real solutions," said Omer Esiner, chief
market analyst at Commonwealth Foreign Exchange in Washington.
 Traders shifted their focus to U.S. President Barack
Obama's televised speech to Congress at 7 p.m. EDT (2300 GMT).
He is expected to announce a $300 billion plan that includes
tax cuts for middle-class families and businesses and new
spending to repair roads, bridges and other
infrastructure.[nN1E786157]
 "Everyone's waiting for the president to give a real, good,
solid speech tonight. He's got to deliver something strong and
positive," said Michael Cullen, head bond trader at Wall Street
Access in New York.
 Later this week, G7 finance ministers and central bankers
will convene in Marseilles, France, with markets expecting them
to pledge support to help a struggling global economy.
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Graphic-interest rate outlook: link.reuters.com/pej23s
 Graphic - U.S. jobless claims: r.reuters.com/dym63s
 U.S. exports and the dollar:   r.reuters.com/xan63s
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 A U.S. government report showing an increase in weekly
jobless claims and remarks by European Central Bank President
Jean-Claude Trichet about downside risks to the euro zone's
economy fueled fears that both the United States and Europe are
at risk of slipping into recession.
 Those worries briefly pushed equities markets into negative
territory before some buying emerged before Bernanke's speech.
 After a choppy trading session, the Dow Jones industrial
average .DJI ended down 119.05 points, or 1.04 percent, at
11,295.81. The Standard & Poor's 500 Index .SPX finished down
12.72 points, or 1.06 percent, at 1,185.90. The Nasdaq
Composite Index .IXIC closed down 19.80 points, or 0.78
percent, at 2,529.14.
 Losses on Wall Street knocked MSCI's world stock index
.MIWD00000PUS down 0.6 percent on the day. The MSCI index has
recovered a tad from its August correction -- the worst monthly
loss since 2008 -- but is still 16 percent below the 2011 highs
hit in May.
 Earlier, Tokyo's Nikkei .N225 finished up 0.3 percent,
while the FTSEurofirst 300 index .FTEU3 of top European
shares ended up 0.9 percent after erasing early gains on the
ECB's decision to leave key rates steady.
 In the wake of Trichet's cautious economic outlook and the
chances of no more rate hikes in the foreseeable future, the
euro fell to a two-month low against the dollar. It ended down
1.5 percent at 1.3887 after hitting a session low of $1.3875 on
the EBS trading platform. EUR=EBS
 In the bond market, benchmark 10-year German Bund yields
EU10YT=TWEB touched a historic low of 1.82 percent while U.S.
10-year Treasuries US10YT=RR were up 17/32 in price, their
yield at 1.9822 percent, not far above a 60-year low of 1.9080
percent set on Tuesday.
 Spot gold prices XAU= jumped almost $50 or 3 percent to
$1,865 an ounce. [GOL/]
 Financial markets plan to observe the 10th anniversary of
the Sept. 11th terror attacks on Friday. NYSE Euronext will
host events at its New York and European exchanges, while the
CME Group will hold four voluntary moments of silence.
 (Additional reporting by Ed Krudy, Emily Flitter, Wangfeng
Zhou and Barani Krishnan; Editing by Dan Grebler)






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