Global stocks, euro hit by Spain debt sale; ECB stands pat

Wed Apr 4, 2012 8:34am EDT
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By Simon Jessop

LONDON (Reuters) - Stocks and the euro fell on Wednesday after policymakers in the United States dimmed hopes of fresh asset-buying, underlining its divergence from a Europe facing recession and firmly back in crisis-fighting mode after a weak Spanish bond sale.

Spain, firmly at the sharp end of the euro zone crisis, raised less debt than hoped at rising yields, focusing market attention on a European Central Bank that, as widely expected, held the region's borrowing costs at record lows.

ECB President Mario Draghi's news conference from 8:30 a.m. EDT (1230 GMT) will be eyed for clues as to future monetary policy, with a fresh batch of weak data suggesting any tightening is unlikely.

Sagging orders kept euro zone businesses in the doldrums in March, probably pushing the region into a mild recession, Markit data suggested on Wednesday, while euro zone retail sales data also weakened.

By 8:07 a.m. EDT (1207 GMT), European shares .FTEU3 and world stocks .MIWD00000PUS were both down around 1 percent, while emerging market shares .MSCIEF were 1.3 percent lower. U.S. stock index futures .SPc1 all pointed to a lower open on Wall Street.

"There is still the risk of a double-dip recession in Europe. It's not clear where the engine of growth overall will come from in the euro zone and there are still some big picture risks out there," Philip Poole, global head of macro investment strategy at HSBC Global Asset Management, said.

"The performance of European equities will be much more data-dependent and that data over the past month or so has been disappointing."

The euro extended early falls to trade down 0.6 percent against the dollar and 1.2 percent against the yen. The greenback .DXY climbed 0.3 percent against a basket of currencies.   Continued...

A trader checks screen data at the IG Index trading floor in London, December 9, 2011. REUTERS/Finbarr O'Reilly