May 20, 2011 / 8:36 PM / 8 years ago

GLOBAL MARKETS-Euro falls on Greek worries; oil, metals up



 * Euro tumbles on Greece worry and ahead of Spain election
 * U.S. stocks fall, weighed by bank shares
 * Oil prices up 1 pct after a sharp reversal
 * Copper up 1.5 pct as China stockpiles fall
 (Updates prices)
 By Rodrigo Campos
 NEW YORK, May 20 (Reuters) - The euro fell against the U.S.
dollar on Friday on fresh fears of a Greek debt default, which
sent global stocks lower.
 But even as the dollar strengthened against the euro,
copper prices jumped on a decline in Chinese inventories, while
oil prices rose sharply from early losses in choppy trading.
Gold advanced on safe-haven buying.
 A report that Norway suspended the payment of a $42 million
grant to Greece for failure to comply with its EU-IMF bailout
commitments started a sell-off in the euro. Speculation mounted
that Finland, a European Union member, would also suspend
payments. For details see [ID:nOSL016301].
 A Greek daily reported the International Monetary Fund
suspended its review of Greece until the government draws up
further austerity measures. A suspension could mean a delay in
the disbursement of much-needed IMF funds for Athens.
 In addition, rating agency Fitch further downgraded
Greece's credit, fueling the euro's decline. [ID:nLDE74J1K7]
 The single currency was down 1.2 percent at $1.4144
EUR=EBS on trading platform EBS after four days of gains,
with investors focused on the $1.40 level as a short-term
target.
 The news about problems with the EU-IMF Greek bailout plan
almost overshadowed anxiety over Spain's upcoming regional
election this weekend. Spanish bond yields rose on concern the
vote results may undermine Prime Minister Rodriguez Zapatero's
ability to curb Spain's own fiscal deficit.
 "The news has been tough all day for the euro. People were
starting to buy the euro the last few days and then we got all
this news, and then the euro just gave way," said Richard
Franulovich, senior currency strategist, at Westpac in New
York.
 The U.S. dollar index .DXY, a gauge of the greenback
against a basket of currencies, rose 0.75 percent, while
benchmark U.S. Treasuries prices were up 7/32 to yield 3.14
percent.
 On Wall Street bank shares were the hardest hit, though
some retailers also weakened.
 "It's all about the euro," said Paul Mendelsohn, chief
investment strategist at Windham Financial Services in
Charlotte, Vermont.
 "It's not just the commodity stocks," he said. "As the
dollar strengthens, multinational, dollar-sensitive large
cyclical companies go down also."
 The Dow Jones industrial average .DJI lost 93.28 points,
or 0.74 percent, to 12,512.04. The Standard & Poor's 500 .SPX
fell 10.33 points, or 0.77 percent, to 1,333.27. The Nasdaq
Composite .IXIC dropped 19.99 points, or 0.71 percent, to
2,803.32.
 World stocks as measured by MSCI .MIWD00000PUS were down
0.57 percent and the Thomson Reuters global stocks index
.TRXFLDGLPU dropped 0.67 percent.
 Copper prices jumped, with three-month copper CMCU3 up
1.5 percent as investors focused on data showing stockpiles in
warehouses monitored by the Shanghai Futures Exchange fell 14.6
percent from last Friday. [ID:nEMS011047] China is the world's
largest consumer of industrial metals.
 Oil prices bounced back from a more than 2 percent decline
on end-of-week short-covering after crude's intraday plunge ran
into support.
 U.S. light crude futures 2CLc1 gained 1.1 percent to
settle at $99.491 as the contract expired on Friday. Brent
crude LCOc1 was up 0.7 percent, above $112 a barrel.
 Gold rose 1.5 percent, its biggest daily gain in two weeks,
on safe-haven buying as investors fretted about euro zone
debt.
 Spot gold XAU= rose 1.5 percent to $1,513.20 by 4:17 p.m.
EDT (2017 GMT). U.S. June gold futures GCM1 settled up $16.50
at $1,508.90 an ounce, after trading between $1,486.40 and
$1,515.80, which marked a one-week high.
 (Reporting by Rodrigo Campos; additional reporting by Chuck
Mikolajczak, Gertrude Chavez-Dreyfuss, Julie Haviv, Frank Tang
and Robert Gibbons; Editing by Leslie Adler)




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