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World stocks fall after Italian changeover


MARKET CLOSE: Investors doubt "super" Mario Monti will be able to implement the necessary reforms in Italy.

Nevil Gibson
Tue, 15 Nov 2011

Stocks on Wall Street fell, following broad declines in Europe, as investors remained wary over Italy's ability to implement necessary reform measures.

A new government, led by former European Union competition commissioner Mario Monti, took over from Silvio Berlusconi at the weekend.

More news from Europe late in the session also impacted on investor sentiment. 

German Chancellor Angela Merkel's Christian Democratic Union party voted to offer euro states a "voluntary" way to exit the eurozone, while Moody's placed Credit Suisse's credit rating on review for a potential downgrade.

The Dow Jones Industrial Average fell 74.39 points, or 0.6%, to 12,079.20 to close above its lows (10am NZ time).

Gains in a handful of blue-chip stocks limited the Dow's losses. Boeing rose 1.7% after Oman Air said it would buy six 787-8 Dreamliners in a $US1.16 billion deal.

IBM tacked on 0.1% after Warren Buffett said Berkshire Hathaway had bought $US10.7 billion worth of stock this year.

Bank of America slipped 2.4% after it said it expected to net $US1.8 billion from the sale of 10.4 billion shares of China Construction Bank.

The S&P 500 index has shed 1.1%, to 1249. Financial stocks fell the hardest. The Nasdaq Composite has dropped 0.9% to 2655.

Other markets: Europe down, Asia up
European markets erased earlier gains to turn broadly lower. The Stoxx Europe 600 fell 1% to end at 238.47 after being up as much as 0.5% earlier in the session.

In Milan, the FTSE MIB index dropped 2% to 15,464.45. The Italian government successfully sold €3 billion in five-year bonds but yields jumped to 6.29% from 5.32% in a sale last month.

The German DAX 30 index fell 1.2% to 5985.02, France’s CAC-40 index fell 1.3% to 3108.95 and FTSE 100 index closed down 0.5% to 5,519.04.

Asia stocks ended mostly higher amid signs of stability in Europe and a positive third-quarter economic growth reading in Japan.

GDP data showed real annualised growth at 6%, a tad better than forecasts for 5.9%.

The Nikkei Stock Average added 1.1%, Korea's Kospi rose 2.1% and Australia's S&P/ASX was up 0.2%.

Commodities: Oil approaches $US100, gold down
Crude-oil futures were modestly lower after stumbling on a run toward the $100 mark.

Gains in the US dollar discouraged buyers from stepping in as buyers in dollar-denominated oil futures.

Front-month crude oil futures climbed to $US99.69 a barrel – the highest level since July 26 – but failed to break the century mark.

Light, sweet crude oil for December delivery was 81USc lower at $US98.18 a barrel in New York. Brent crude for December was $US1.01 lower, at $US113.15 a barrel.

Gold edged lower amid pressure from a stronger US dollar. The contract for November delivery was down $US8.50, or 0.5%, at $US1,779 an ounce in New York.

Currencies: US dollar advances
The US dollar extended gains, with the euro coming under more pressure after a sale of five-year Italian government bonds came at the highest cost for the government since 1997.

Traders were also worried the new technocratic government in Rome faced daunting challenges in insulating the euro zone's third-largest economy from the region's debt crisis.

The euro was at $US1.3640 compared with $US1.3755 late on Friday.

The dollar traded at ¥76.95 compared with ¥77.15, while the UK pound bought $US1.5905 from $US1.6070.

The dollar changed hands at 0.9073 Swiss franc from 0.8996 franc.

Nevil Gibson
Tue, 15 Nov 2011
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World stocks fall after Italian changeover
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