Merck's drug setback knocks US stocks

UPDATED Stocks on Wall Street have fallen, led by by a drop in healthcare shares as Merck halted an important clinical study on an anti-clotting drug.

Elsewhere, successful bond auctions in Spain and Italy helped shore up sentiment in European and Asian markets.

Merck’s 6.8% drop pushed the Dow Jones Industrial Average down 37.39 points, or 0.3%, to 11,718.05 just before the close (10am NZ time).

Merck’s researchers have halted one of two major studies of its drug vorapaxar and made significant changes to the other, throwing into doubt the future of one of the most important medicines in its product pipeline.

The Nasdaq Composite was down 0.2% at 2733.07 and the S&P 500 index was also down 0.2% to 1282.56.

Other markets: Europe down, Asia up
Spanish stocks surged for a third day, led by gains for banks after a successful government bond auction.

The Stoxx Europe 600 index fell 0.6% to close at 284.04, while the IBEX 35 index jumped 2.7% to 10,370.80 in Madrid.

Financial stocks gained ground across most of the rest of Europe as well. In Paris, Société Générale advanced 4.5% and BNP Paribas added 2.9%, helping the CAC 40 index rise 0.8% to 3974.83.

An exception to banking-sector gains was Germany's Commerzbank, which dropped 1.2% in Frankfurt it announced plans to increase its share capital by as much as 10%. The German DAX 30 index, which finished up just 0.1% at 7075.11.

The UK's FTSE 100 closed 0.4% lower at 6023.88.

In Asia, Australian stocks rallied in relief that a flood in Queensland state had peaked, while Hong Kong and Shanghai shares rose for a third straight session.

Japan's Nikkei Stock Average touched an eight-month high and Korean shares retreated after a surprise interest-rate increase by the central bank.

Indian stocks were hit by disappointment over the results and outlook for software bellwether Infosys Technologies.

Australia's S&P/ASX 200 climbed 1.5% to 4795.24, Hong Kong's Hang Seng Index rose 0.5% to 24238.98 and China's Shanghai Composite inched up 0.2% to 2827.71.

Japan's Nikkei climbed 0.7% to 10,589.76, while India's Sensex sank 1.8% to 19,182.82 and Korea's Kospi declined 0.3% to 2089.48.

Commodities: Oil up, gold down
Crude futures rebounded, aiming for new two-year highs as oil traders reacted to a big drop in the US dollar.

Light, sweet crude for February delivery rose 38USc, or 0.4%, to $US92.24 a barrel in New York. Brent crude on the ICE futures exchange traded 36USc higher at $US98.48 a barrel.

Gold futures erased gains after a jump in US unemployment claims wasn't as dire as originally thought. Gold had hit an intraday high of $US1392.90 after data showed initial unemployment claims increased by 35,000 to 445,000 last week.

The most actively traded gold contract, for February delivery, was down $US3.60, or 0.3%, at $US1382.20 an ounce in New York.

Currencies: Euro up, dollar down
The euro surged to its strongest levels in a week, after successful Spanish and Italian bond auctions converged with an unexpected rise in US jobless claims.

The euro was at $US1.3379, up from $US1.3133 late in New York on Wednesday. The US dollar was at ¥82.63, down from ¥82.97, while the euro was up at ¥110.55 from ¥108.96.

The pound was trading at $US1.5880, up from $US1.5768.