* Wall Street shares fall further after Wednesday slump
* Euro hits two-month low after ECB holds rates steady
* U.S., German government debt prices, gold, rise
By Richard Leong
NEW YORK, Nov 8 Global stocks fell further on
Thursday on concerns about a looming fiscal crisis, while the
euro fell to a two-month low after the European Central Bank
refrained from taking more action despite signs of further
U.S. lawmakers' pledges to avoid the "fiscal cliff" - some
$600 billion in automatic tax hikes and spending cuts due in
January - did little to dispel persistent doubts as to whether
Congress can agree on a timely compromise.
Fears that the world's biggest economy may suffer a
recession in 2013 as a result of a sudden fiscal adjustment led
stocks and crude oil prices to fall sharply on Wednesday and the
slide continued on Thursday.
"This gridlock adds to the uncertainty for markets. It shows
the difficult problems Washington faces won't get fixed any time
soon," said Daniel North, chief economist at Euler Hermes ACI in
Owings Mills, Maryland.
However, U.S. stocks stabilized Thursday morning partly on
news of a rise in U.S. exports and a bigger-than-expected drop
in jobless benefit claims, though the data was distorted by the
storm that disrupted life in U.S. Northeast in the past week.
On Wall Street, the three major U.S. stock indexes reversed
their slight gain after a flat opening. Their decline
accelerated in early afternoon trading, prompted by investors
socking more money into bonds from stocks, analysts said.
The Dow Jones industrial average was down 56.69
points, or 0.44 percent, at 12,876.04. The Standard & Poor's 500
Index was down 9.31 points, or 0.67 percent, at 1,385.22.
The Nasdaq Composite Index was down 27.79 points, or
0.95 percent, at 2,909.50.
Whole Foods Market Inc reported income that matched
forecasts, but shares of the biggest U.S. natural and organic
grocery chain fell 5.1 percent to $91.01.
On Wednesday, the S&P 500 stock index suffered its biggest
one-day percentage drop since June, and the Dow closed at its
lowest since early August.
The FTSE Eurofirst 300 index of top European shares
closed down 0.15 percent at 1,097.71 o n T hursday, the lowest
level in a week.
FTSE component Siemens ended up 1.8 percent at
80.27 euros a share after the German engineering conglomerate
reported a smaller-than-expected drop in profits and announced a
cost-saving plan worth 6 billion euros ($7.7 billion).
The MSCI world equity index was down 0.7
percent at 324.64 after Tokyo's Nikkei lost 1.5 percent.
The ECB left its key interest rate at 0.75 percent,
disappointing some traders who had bet on more policy easing in
the wake of recent comments by ECB President Mario Draghi on the
weak economic outlook and gloomy European Commission growth
The Bank of England also left its key rate unchanged, at 0.5
The absence of more ECB action spurred selling in the euro
, knocking it down to a two-month low versus the U.S.
dollar at $1.2719. It last traded at $1.2739, down 0.25 percent
for the day.
The euro had been under pressure before the ECB rate
decision, even though the Greek parliament approved in the early
hours of Thursday an austerity package needed to unlock
international aid and avert bankruptcy, defying political rifts
and violent protests.
"The euro will continue to weaken because there is no
recovery in sight for Europe and the rest of the world continues
to slip," said Joseph Trevisani, chief market strategist at
Worldwide Markets in Woodcliff Lake, New Jersey.
Meanwhile, Spain, another heavily indebted euro zone member,
sold 4.8 billion euros ($6 billion) of new debt, completing its
cash needs for this year. This means Madrid can hold out longer
before asking for international aid.
The somewhat encouraging news in Europe curbed safe-haven
bids for U.S. and German government debt, but persistent unease
about the region's debt woes and the gridlock in Washington
deterred any meaningful selling in bonds.
The benchmark 10-year U.S. Treasury note rose
4/32 in price to yield 1.628 percent, down 2 basis points from
late on We dnesday after the strong 30-year bond auction, while
German Bund futures were up 28 basis points at 143.02,
near their session highs.
In commodity markets, crude oil retreated from its session
highs after tumbling more than $4 a barrel o n W ednesday on
concerns about weak demand for fuel as the U.S. and European
economies face the risk of a protracted slowdown.
Brent crude was flat at $106.82 per barrel after
falling nearly 4.0 percent on Wednesday, its steepest drop since
December. It rose as high as $108.17 earlier.
U.S. crude rose 65 cents to settle at $85.09, after
losing nearly 5 percent in the previous session, also its
biggest slump since December.
Gold was on track for a fourth straight days of gains
on safe-haven bids due to worries about the U.S. fiscal cliff
and Europe's debt crisis. Spot bullion was up 0.79 percent at
$1,729.90 an ounce.