BusinessDesk: 'The market is very much on tenterhooks about the European auctions'

BusinessDesk: 'The market is very much on tenterhooks about the European auctions'

Clouds darkened over the euro zone as rising borrowing costs prompted the European Central Bank to buy Italian and Spanish bonds, though not aggressively enough to bolster markets.

Separately, the Bank of England said the outlook for Britain’s economy was bleak, citing the euro zone’s debt crisis as the country’s “single-biggest risk” and leading it to slash its growth forecast for both 2011 and 2012 to 1 percent.

The tide of grim news from Europe overwhelmed more positive data on the world’s biggest economy. Consumer prices dropped for the first time in four months in October, while industrial output rose more than forecast in October.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.36 percent, the Standard & Poor's 500 Index dropped 0.36 percent and the Nasdaq Composite Index declined 0.34 percent.

"The US economic numbers are starting to improve, but it's all being trumped by what's going on in Europe,” Alan Lancz, president of an investment advisory firm based in Toledo, Ohio, told Reuters. “The contagion of spreading into other countries is what's worrying us."

US consumer prices fell 0.1 percent in October, the Labor Department said. It’s the first drop in four months, and a boon for consumers. Weekly earnings increased 0.3 percent last month when accounting for inflation, according to a separate Labor Department report.

Output at factories, mines and utilities climbed 0.7 percent after a revised 0.1 percent drop in September, figures from the Federal Reserve showed. The median forecast of 83 economists surveyed by Bloomberg News called for a 0.4 percent gain in production. Estimates ranged from increases of 0.1 percent to 0.8 percent.

"The consistent theme in the recent flow of economic data has been one of accelerating momentum in economic activity," Millan Mulraine, a senior macro strategist at TD Securities in New York, told Reuters.

"Nevertheless, the concern for the recovery continues to be about what happens in Europe, as any escalation in the unfolding debt crisis could present a significant obstacle for the economic recovery."

Dell shares fell more than 2 percent after its quarterly earnings fell short of expectations and the maker of personal computers forecast sluggish sales for the rest of the year.
In Europe, the Stoxx 600 Index ended the day unchanged.

In Italy, Mario Monti was confirmed by lawmakers as the country’s prime minister, while in Greece new Prime Minister Lucas Papademos won a confidence vote in parliament that will allow him to move forward with budget measures.

The bond buying by the ECB proved a temporary fix as Italian yields, which initially slid to about 6.83 percent later climbed back above 7 percent.

France appeared to plead for stronger intervention by the EU’s central bank as the nation’s top-notch AAA-credit rating is under threat, according to Reuters.

"The ECB's role is to ensure the stability of the euro, but also the financial stability of Europe. We trust that the ECB will take the necessary measures to ensure financial stability in Europe," government spokeswoman Valerie Pecresse said after a cabinet meeting in Paris, Reuters reported.

The euro dropped as a result, last 0.3 percent lower on the day at US$1.3504.

“The market is very much on tenterhooks about the European auctions,” Boris Schlossberg, director of research at the online currency trader GFT Forex in New York, told Bloomberg News. “If the French debt comes out and goes badly, that will really send a signal that contagion has spread to and infected the core.”


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"Tenterhooks".......don't you mean Meathooks!

The us data is the usual spin and BS.

The planning for a post euro era has been going on all year.

The piigs are dead meat.

The smart and the wealthy abandoned the euro months ago.

Greeks are giving their govt austerity plans the big Greek finger.

The UK is going Japanese....what growth?



Wolly I think the US consumer checked his bank account, saw that he was 15 trillion OD and thought: stuff it, I'm off to the shops!

Likely stocking up on survival stuff...beans and ammo...gas masks to be safe from the pepper spray and tear gas...fuel to reach Mexico in the camper or South Florida....Pretty soon the capitalist revival in Cuba will open the gates to Americans wanting to escape the bitter winter and bitter US govt taxes.

Now that the Cuban dictatorship has relaxed the property ownership rules...might the right time to pick up a disused casino or grab a mooring for the yacht.

Only a minority will prepare for bad times, the majority will live in denial. I hope you haven't been stocking up on beans and guns  too Wolly.


Beans for gas to run the heap 69r....they is good grub and cheap I get double use...hard to keep the hose in place though....have to disconnect the turbo....

Sounds like you are on to a winner there Wolly, hope you have blowback protection fitted though. I think Obama is thinking along the same lines as you.