December 12, 2013
Global stocks fall as US spending deadline near
Global equity markets fell and the dollar hit a 7-1/2-month low against the safe-haven Swiss franc as the prospect of a shutdown of US government operations next week and a possible debt default several weeks later unsettled investors.
The Dow Jones industrial average .DJI closed down 70.06 points, or 0.46 percent, at 15,258.24. The Standard & Poor's 500 Index .SPX fell 6.92 points, or 0.41 percent, at 1,691.75. The Nasdaq Composite Index .IXIC slid 5.83 points, or 0.15 percent, at 3,781.59.
European shares turned lower today, led by Italian stocks after a weak auction of the country's bonds highlighted increasing concerns about a political crisis in Rome.
Milan's FTSE MIB fell 1 percent, the worst performer among European indexes, after Italy had to pay the highest yield since June to borrow over 10-years at an auction on Friday, reflecting worries the country's economic reforms may be derailed if the government collapses.
Former premier Silvio Berlusconi's centre-right party has been threatening to pull out of the government if he is expelled from parliament due to a conviction for tax fraud.
The broader STOXX Europe 600 index was down 0.4 percent at 311.94 points as the political stand-off in Italy added to tensions over difficult US budget and debt negotiations.
Stronger economic data has helped the index rise 9.5 percent in the past three months, sending it to a five-year high last week and leaving it trading at 1.7 times its book value, its highest valuation multiple since 2011, Datastream data showed.
"Prices were reflecting an idyllic scenario, so there's scope for a fairly substantial correction," a pan-European broker in Milan said.
"Obviously, if Berlusconi turns and says he won't bring down the government the market is going to fly again."
The euro zone Euro STOXX 50 index was down 0.5 percent at 2,909.29 points while the Euro STOXX volatility index , a gauge of market bets on future swings in euro zone blue chips based on option prices, rose 1.2 percent.
The broader FTSEurofirst 300 index was down 0.5 percent at 1,251.97 points, but remained on course for its best quarterly gain since 2009.