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Stock rally fades as Spanish crisis deepens

MARKET CLOSE: US blue chips fell as focused on banking and deficit problems in Spain rather than the Greek election outcome.

Nevil Gibson
Tue, 19 Jun 2012

Blue chip stocks on Wall Street fell as Spanish borrowing costs rose to a record high and Greek political leaders began pro-bailout coalition talks after Sunday's election.

The New Democracy party's narrow victory eased fears the country would face an abrupt and unruly exit from the eurozone. But its ability to form a viable coalition remained uncertain.

The Dow Jones Industrial Average closed down 25.35 points, or 0.2%, to 12,741.82. The S&P 500 was up marginally at 1344.78 with technology and consumer discretionary shares gaining while the energy sector lagged.

The Nasdaq Composite rose 22.53 points, or 0.8%, to 2895.33.

Other markets: European rally fizzles, Asia surges
Spanish bond yields surged to the highest on record as investors focused on banking and deficit problems rather than the Greek election outcome.

The price of 10-year government bonds fell, pushing yields to 7.13%, surpassing the 7% level at which Greece, Portugal and Ireland started to lose access to capital markets.

The Stoxx Europe 600 index closed 0.1% higher at 244.36, with gains slowly fading from the open. Greek stocks surged, however, with the Athens General Index up 3.6% to 580.67.

The UK's FTSE 100 rose 0.2% to 5491.09 and Germany's DAX ended up 0.3% at 6248.20, while France's CAC-40 fell 0.7% to 3066.19.

Asian sharemarkets rose in the wake of the Greek election. The standout was Australia's S&P ASX 200, which finished 2% higher at 4136.90, its biggest rise for more than five months.

Other markets gained heavily, but retreated slightly in the session.

Japan's Nikkei Average was 1.8% higher at 8721.02 and Korea's Kospi also climbed 1.8% to 1891.71. Hong Kong's Hang Seng Index was 1% higher at 19427.81 and the China Shanghai Composite gained 0.4% to 2316.05.

Commodities: Oil falls below $US83
Oil futures dropped as rising Spanish bond yields revived worries over Europe's debt crisis.

Light, sweet crude for July delivery fell $US1.69, or 2%, to $US82.34 a barrel in New York Brent crude on ICE Futures Europe fell $US1.94, or 2%, to $US95.67 a barrel.

Currencies: Euro loses gains
The euro surrendered its initial post-Greek election gains against the US dollar in European trading Monday, falling back to levels seen late Friday.

The euro traded under $US1.2618, more than a cent below the highs seen in Asian trading.

The euro was at $1.2566 from $1.2640 late on Friday. The dollar was at ¥78.94 compared with ¥78.71, while the euro was at ¥99.172, compared with ¥99.55.

The pound was at $US1.5652 from $US1.5715, while the dollar bought 0.9559 Swiss franc from 0.9502 franc.

The Australian dollar traded down close to parity with the US equivalent after surging in Asian hours. The Aussie was recently at $US1.0076 from $US1.0081 late on Friday.

Nevil Gibson
Tue, 19 Jun 2012
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Stock rally fades as Spanish crisis deepens