Global stocks, euro slip on Greece, Fed uncertainty

Fri Aug 24, 2012 10:05am EDT
 
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By Wanfeng Zhou

NEW YORK (Reuters) - Major global stock indexes fell and the euro weakened against the dollar on Friday on renewed worries about Greece and after mixed U.S. economic data stirred uncertainty over the prospect of near-term stimulus from the Federal Reserve.

Concern over how Europe will attempt to lower Spain's borrowing costs added to jitters in financial markets. Spain's deputy prime minister said on Friday his government is not in talks with the euro zone over financial assistance to lower those costs.

Germany, as well as France, want Greece to stay in the euro zone but Athens must meet its commitments, Chancellor Angela Merkel said after meeting Greek Prime Minister Antonis Samaras.

"If you are a bull and want central banks to absorb debt issues you want to hear (Merkel) sound acquiescing," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. "That's not where she was starting the conversation from."

Shares held on to losses after data showed new orders for long-lasting U.S. manufactured goods surged in July, but a second straight month of declines in a gauge of planned business spending pointed to a slowing growth trend in the factory sector.

The mixed signals added to uncertainty on whether the Fed will soon act to help the economy. Hopes for action grew after minutes from the Fed's latest meeting, released on Wednesday, showed policymakers might deliver another round of stimulus "fairly soon" unless the economy improves considerably.

"There is some volatility at the core, but the overall feeling is that the economy is still trending in the right direction," said Ravi Bharadwaj, market analyst at Western Union Business Solutions in Washington. "For now, based on the string of reports we've had so far, there doesn't seem to be a need of further quantitative easing from the Fed."

The MSCI global stock index .MIWD00000PUS slipped 0.7 percent to 322.47 points.   Continued...

 
A worker on the IG Group's trading floor looks away from his screens in the City of London, October 4, 2011. REUTERS/Olivia Harris