Global shares, euro slide on Portugal political crisis

Wed Jul 3, 2013 1:24pm EDT
 
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By Herbert Lash

NEW YORK (Reuters) - Global equity markets slid on Wednesday on worries over signs of slowing growth in China and deepening political turmoil in Portugal, where talks over the government's future weighed on the euro and threatened to reignite the euro zone crisis.

U.S. stocks bucked the trend, however, rising in a shortened session ahead of the Independence Day holiday after see-sawing on news of surprisingly strong private sector job creation and data showing unexpectedly weak growth in the huge services sector.

Portugal's 10-year bond yield shot above 8 percent and its stock market slumped 6 percent at one point on fears a snap election could derail Lisbon's exit next year from a bailout by the European Union and International Monetary Fund.

Concerns over Greece's ability to fulfill the conditions of its bailout also raised the prospect of a reawakened debt crisis in the "peripheral" countries of the euro zone.

U.S. oil prices, meanwhile, hit a 14-month high on fears unrest in Egypt could destabilize the Middle East and spark supply disruptions. Gold rose more than 1 percent as the dollar and equity markets remained under pressure.

The political crisis in Portugal led the country's bourse to post its worst day in two years and dragged banking shares down, the biggest contributor to declining European stocks. Portuguese stocks .PSI20 closed down 5.3 percent.

Euro zone banks fell 1.8 percent and the broad FTSEurofirst 300 .FTEU3 of leading European shares fell 0.68 percent to close at 1,150.90.

MSCI's all-country world equity index .MIWD00000PUS fell 0.47 percent, paring losses as stocks on Wall Street rose, while its gauge of emerging markets .MSCIEF fell 1.97 percent.   Continued...

 
Traders work on the floor of the New York Stock Exchange shortly after the opening of the markets in New York July 3, 2013. REUTERS/Lucas Jackson