* 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.
The slide continued on Thursday, with the benchmark S&P 500
stock index and Nasdaq both down more than 1 percent and the Dow
almost as much.
"The fears about Europe's economy remain and we still are
worrying about the 'fiscal cliff' facing the United States,"
said Phil Flynn, analyst at Price Futures Group.
A rise in U.S. exports and a bigger-than-expected drop in
jobless benefit claims, though distorted by the storm that
disrupted life in the U.S. Northeast this past week, helped
stabilize U.S. stocks early in the session.
The S&P 500 suffered its biggest one-day percentage drop
since June on Wednesday, and the Dow closed at its lowest since
But the three major U.S. stock indexes reversed a slight
gain and their decline later accelerated, prompted by investors
socking more money into bonds from stocks, analysts said.
The Dow Jones industrial average closed down 121.41
points, or 0.94 percent, at 12,811.32. The Standard & Poor's 500
Index fell 17.02 points, or 1.22 percent, at 1,377.51.
The Nasdaq Composite Index slid 41.70 points, or 1.42
percent, at 2,895.58.
Whole Foods Market Inc reported income that matched
forecasts, but shares of the biggest U.S. natural and organic
grocery chain fell 5.9 percent to $90.31.
The FTSE Eurofirst 300 index of top European shares
closed down 0.15 percent at 1,097.71 on Thursday, 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 0.9
percent at 323.78 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 $1.2745, down 0.2 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
8/32 in price to yield 1.6165 percent, while German Bund futures
were up 28 basis points at 143.02, near their session
In commodity markets, crude oil retreated from its session
highs after tumbling more than $4 a barrel on Wednesday on
concerns about weak demand for fuel as the U.S. and European
economies face the risk of a protracted slowdown.
Brent crude settled 43 cents higher at $107.25 a
barrel after falling nearly 4.0 percent on Wednesday, its
steepest drop since December. It rose as high as $108.17
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 0.89 percent at
$1,731.60 an ounce.