U.S. stocks, euro lower; risk tolerance declines

Tue Nov 27, 2012 11:04am EST
 

NEW YORK (Reuters) - U.S. stocks fell on Tuesday, reversing a positive trend for stocks elsewhere in the world, and the euro slipped as worry over the threat to the world economy posed by the U.S. "fiscal cliff" offset optimism from a deal to ease Greece's debt burden.

Shares globally had climbed earlier and safe-haven German bonds fell after global lenders reached a new deal to reduce Greece's debt and release loans needed to keep the country afloat.

But as Democrats and Republicans prepared to resume budget negotiations in Washington, investors in U.S. stocks took a second look at risk.

U.S. data failed to allay concerns. A gauge of planned U.S. business spending increased by the most in five months in October, but a fourth straight month of declines in shipments underscored the damage inflicted by fears of tighter fiscal policy next year.

"For those of us that are worried about the economy in 2013, given the uncertainty of the fiscal cliff, this is a little bit helpful," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York. "But that doesn't remove the overarching worry about the 'cliff' or that tax policy and spending policy will not be right, given the weak economy."

The Dow Jones industrial average .DJI was down 40.59 points, or 0.31 percent, at 12,926.78. The Standard & Poor's 500 Index .SPX was down 3.60 points, or 0.26 percent, at 1,402.69. The Nasdaq Composite Index .IXIC was down 6.21 points, or 0.21 percent, at 2,970.58.

The MSCI index of global stocks .MIWD00000PUS was last down 0.2 percent. European shares on the FTSEurofirst 300 index .FTEU3 were up 0.2 percent and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.6 percent to a near three-week high.

Greece remained dominant in the headlines. After 12 hours of talks, international lenders decided on steps to cut Greek debt to 124 percent of gross domestic product by 2020 and promised further measures to lower it below 110 percent in 2022.

Following months of jockeying, the deal was broadly expected by markets and clears the way for Greece's euro zone neighbors and the International Monetary Fund to disburse almost 35 billion euros of aid next month.   Continued...

 
A general view of the German stock exchange in Frankfurt November 7, 2012. REUTERS/Lisi Niesner