Global shares, bond yields plunge on fears for banks and global growth

Thu Feb 11, 2016 5:49pm EST
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By Sam Forgione

NEW YORK (Reuters) - Stock markets fell worldwide on Thursday on fears over the health of the global economy and the banking sector, with MSCI's global stock index dropping to more than 20 percent below its all-time high, while safe-haven 10-year Treasury yields hit their lowest since 2012.

Doubts about central banks' ability to avoid deflation and stimulate economic growth have now pushed the U.S. benchmark S&P 500 .SPX index down 10.5 percent for the year. The FTSEurofirst 300 .FTEU3 index of top European shares sank to its lowest level in 2-1/2 years.

Yields on benchmark 10-year U.S. Treasury notes hit 1.53 percent, their lowest level since August 2012, on the worries over global growth and the effectiveness of central bank policy.

The U.S. dollar hit its lowest against the yen since October 2014, at 110.985 yen, and was on track for its worst week against the Japanese currency since 2008.

"There are mounting concerns about the ability of central banks to continue to prop up asset prices," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "That's part of why we're seeing assets across the board come under pressure."

European bank stocks ended 6.3 percent lower, making them the worst-performing sector and widening their losses for the year to more than 28 percent. Shares of Societe Generale (SOGN.PA: Quote), France's second-biggest bank, closed down 12.6 percent after disappointing profit results.

The S&P financial stock index .SPSY ended down about 3.0 also on concern that low economic growth and negative interest rates in some countries is undermining bank profitability.

MSCI's all-country world equity index, which tracks shares in 45 nations, was last down 4.73 points, or 1.32 percent, at 353.35. The index hit its lowest level in more than 2-1/2 years and closed down more than 20 percent from an all-time high.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) February 9, 2016. REUTERS/Brendan McDermid