NEW YORK - Global stocks and the euro fell on Friday as new doubts about Europe's bailout package and worries over the outcome of a key vote in Greece overshadowed signs of an improving US labor market.
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Greek Prime Minister George Papandreou faces a vote of confidence Friday night, with the fate of the nation's deal on a euro zone debt bailout and the global economy in the balance.
Analysts declared the outcome too tight to forecast, but had a hunch Papandreou might survive the vote, which is expected as late as midnight in Athens (2200 GMT).
The vote is unlikely to end the uncertainty hanging over Greece and the euro zone that has roiled markets for weeks, and may well begin a protracted political and diplomatic process.
The bid for safe-haven assets rose, with government debt gaining after German Chancellor Angela Merkel said few countries in the Group of 20 leading economies had committed to providing more resources for a euro zone rescue fund.
Merkel's comment eclipsed relief over the decision by Greece on Thursday
to ditch controversial plans to hold a referendum on its bailout, a
development that initially had calmed fears of an imminent sovereign
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The assessment also highlighted the fragility of the deal reached to
rescue Greece. The deal aims to increase the euro zone's rescue fund to
give it firepower of 1.0 trillion euros.US unemployment numbers fail to lift market
Signs of an improving US labor market failed to lift the market. Labor
Department data showed US hiring slowed in October, but the unemployment
rate hit a six-month low and job gains in the prior two months were
stronger than previously thought.
Trading has been volatile on quickly changing news from Europe. The US
S&P 500 has registered daily swings of more than 1.5 percent this
week. The benchmark index, which posted its best month in 20 years in
October, posted its first down week in five.
"There's too much uncertainty going on. What Greece has taught us this
week is that just when you think things are certain, they're actually
not," said Camilla Sutton, chief currency strategist, at Scotia Capital
The Dow Jones industrial average closed down 61.23 points, or 0.51
percent, at 11,983.24. The Standard & Poor's 500 Index fell 7.92
points, or 0.63 percent, to 1,253.23. The Nasdaq Composite Index slid
11.82 points, or 0.44 percent, to 2,686.15.
Stock sectors most exposed to weakness in European banks and tied to
growth, such as industrials, financials, materials and energy, were
among the weakest.
Shares of daily deals site Groupon Inc rose 30 percent in their stock
market debut, but at least some of the early trading exuberance may have
come from limiting the fraction of the company that was sold.
World stocks as measured by the MSCI all-country world index pared
losses to trade near break-even on strength in emerging markets. EPFR
Global reported $3.5 billion flowed into emerging market equity funds in
the week ended Wednesday, the second-largest inflow this year.
In Europe, the FTSEurofirst 300 index of top regional shares slid 1.0
percent to 980.01, erasing early gains. The index posted its first
weekly loss in six weeks.Berlusconi turns down IMF funding
Italian banks UniCredit and Intesa SanPaolo, heavily exposed to Italy's sovereign debt, fell 6.6 and 4.8 percent, respectively.
Italian Prime Minister Silvio Berlusconi, who is facing pressure to
resign, turned down an offer of funding from the International Monetary
Fund, which has placed the country under supervision as it struggles
with its debt mountain.
"The Italian bond yield is the only game in town. If this trend
continues, we've got serious problems. It's not sustainable. There's no
reason to take any more risk at the moment," said David Coombs, fund
manager at Rathbone Brothers, which has 15.2 billion pounds ($24.2
billion) under management.
The euro slid against the dollar as uncertainty persisted about the EU's bailout program. The euro fell 0.3 percent to $1.3770.
The benchmark 10-year U.S. Treasury note rose 10/32 in price to yield
2.04 percent, while the December Bund future settled up 73 ticks.
Italian two-year government bond yields jumped and the spread of Italian 10-year yields over Bunds hit a new lifetime high.
Crude oil prices rose in choppy trade.
Brent futures rose $1.14 to settle at $111.97 a barrel. U.S. light crude futures rose 19 cents to settle at $94.26 a barrel.
US gold futures for December delivery settled down $9 at $1,756.10 an ounce.
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