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Greek fears send stocks tumbling

MARKET CLOSE: Prime Minister George Papandreou is trying to form a new government as protests against austerity measures turn violent.

Nevil Gibson
Thu, 16 Jun 2011

Stocks on Wall Street lost all and more of the previous session's gains as fears of a Greek default added more pessimism to a depressing bag of US economic data.

Greek fears intensified after euro-zone officials failed to make progress on discussions about Greek aid and Prime Minister George Papandreou announced he was forming a new united government as protests against austerity measures turned violent in Athens.

On the economic front, the Federal Reserve Bank of New York's Empire State Manufacturing Survey fell below zero for the first time since last November, dropping 20 points from May to -7.79. The index dramatically disappointed economists' expectations of a reading of 12.

Meanwhile, core inflation last month posted its biggest gain in nearly three years, with overall consumer prices rising 0.2%, following a 0.4% increase in April.

At the close (8am NZ time), the Dow Jones Industrial Average was down 178.84 points, or 1.5%, to 11,897.27, wiping out the week's gains. The S&P 500 index dropped 1.7% to 1265.41 and the Nasdaq Composite shed 1.5%, to 2631.46.

Bank and materials stocks led the decline. Bank of America fell 2.9% and JP Morgan Chase skidded 2.6%, while Alcoa was off 2.7% and Home Depot declined 2.1%. Defensive sectors, including health care, utilities and telecommunications, were relatively strong.

Other markets: Europe, Asia slump
European stocks fell sharply amid mounting concerns about Greece's finances and further signs that the US recovery may be stalling.

The Stoxx Europe 600 index closed down 1.1% at 267.95, while Greece's ASE index skidded 1.9% to 12,43.05.

The UK's FTSE 100 index fell 0.9% to 5748.05, France's CAC-40 index dropped 1.5% to 3806.85 and Germany's DAX fell 1.2% to 7115.08.

Shares fell in Hong Kong and Shanghai as banks suffered from Beijing's latest increase in lenders' reserve-requirement ratio, while Japanese stocks rose, helped by exporters and another surge for Tokyo Electric Power.

Hong Kong's Hang Seng Index dropped 0.7% to 22,343.77, the Shanghai Composite fell 0.9% to 2705.43 and the Nikkei Stock Average rose 0.3% to 9574.32.

The Australian S&P/ASX 200 index lost 0.4% to 4566.77, Korea's Kospi added 0.5% to 2086.53 and India's Sensex fell 1% to 18,132.24.

Commodities: Oil drops, gold rises
Crude-oil futures fell to a four-month low, tumbling toward levels last seen during the early stages of Libya's rebellion.

Light, sweet crude oil for July delivery dropped $US4.01, or 4%, to $US95.34 a barrel in New York, after falling as low as $US94.01 earlier in the session.

Brent crude oil on the ICE futures exchange traded $US3.01 lower at $US117.15 a barrel.

Gold rose after monthly data showed greater-than-expected inflation rates in the US. The most actively traded contract, for August delivery, was up $US8.30, or 0.5%, at $US1,532.70 an ounce.

June-delivery gold was up $US9.60, or 0.3%, at $US1,533.40 an ounce.

Currencies: Euro plunges
The euro fell 1.7% to below $US1.42 for the first time since May 27. It was at $US1.4183 from $US1.4440 late on Tuesday. The euro fell against other currencies as well, dropping to ¥114.62 versus the yen and to 1.2097 against the Swiss franc.

The US dollar was at ¥80.93 from ¥80.49. The UK pound was at $US1.6175 from $US1.6368, and the dollar bought 0.8540 franc from 0.8455 franc.

Nevil Gibson
Thu, 16 Jun 2011
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Greek fears send stocks tumbling