A roundup of trading on major world markets:
NEW YORK – Stocks wavered between small gains and losses during afternoon trade after Standard & Poor’s expanded its downgrade threat against Europe to include the region’s bailout fund.
The credit rating agency warned on Monday that it might downgrade 15 countries that use the euro, even Germany, which has a perfect AAA rating and Europe’s strongest economy. On Tuesday, S&P said it might also cut the AAA rating of Europe’s bailout fund.
The fund needs that top rating to cheaply raise money, and losing it would mean it would cost billions more to fund bailouts. European markets mostly fell on the news.
The Dow Jones industrial average was up 63.54 points, or 0.53 per cent, at 12,161.37. The Standard & Poor’s 500 index was up 1.51 points, or 0.12 per cent, at 1,258.59, and the Nasdaq composite index was down 9.75 points, or 0.37 per cent, at 2,646.01.
Among the Dow’s top performers was 3M Co, which rose 1.6 per cent after the maker of Post-It notes forecast 2012 earnings that were stronger that many analysts expected.
Traders are looking ahead to a crucial summit of European leaders that wraps up Friday. They hope to see more concrete solutions to restore long-term confidence in the euro and rescue the region from the sovereign debt crisis that has roiled world markets for months.
S&P’s warning on Monday had little effect on Wall Street because traders believe the European crisis has crested, and things will improve slowly from this point, said Robert Tipp, chief investment strategist with Prudential Fixed Income.
LONDON – European shares mostly slid lower and the euro hit a one-week US dollar low after an S&P warning of a eurozone downgrade overshadowed news of a Franco-German plan to save the single currency.
The shock S&P announcement came as European Union leaders prepared for a two-day summit which is regarded as crucial for the future of the eurozone, whose debt crisis has sent global markets into turmoil.
Frankfurt’s DAX 30 ended the day down 1.27 per cent to 6,028.82 points and in Paris the CAC 40 retreated 0.68 per cent to 3,179.63 points.
Madrid slipped 0.08 per cent and Milan shed 0.49 per cent in value.
But London’s FTSE 100 index just managed to remain in positive territory in cautious trade, edging up 0.01 per cent to close at 5,568.72 points.
However, the euro sank to $US1.3334 – the lowest point since November 30 – before pulling back to $US1.3384. The dollar slid to 77.72 yen from 77.83 yen on Monday.
Borrowing rates for Germany and France rose slightly on the bond market.
HONG KONG – Asian markets fell in cautious trade as a Standard & Poor’s warning of a possible downgrade for the eurozone offset news that France and Germany had outlined a plan to save the single currency.
Tokyo gave up 1.39 per cent, or 120.82 points, to 8575.16 on Tuesday and Seoul lost 1.04 per cent, or 20.08 points, to end at 1902.82.
Hong Kong fell 1.24 per cent, or 237.46 points, to 18,942.23 and Shanghai lost 0.31 per cent, or 7.32 points, to 2325.91.
The Asian Development Bank trimmed its 2012 growth projections for emerging East Asian economies, including China, from 7.5 per cent to 7.2 per cent because of the continuing eurozone uncertainties.
It said “major downside risks” included a deep recession in Europe and the United States, higher protectionism and persistent inflation.
WELLINGTON – New Zealand shares fell after Standard & Poor’s put most European nations on notice for a possible credit rating downgrade.
Rakon dropped to a record low and has shed almost 30 per cent since posting a loss last month.
Port of Tauranga gained to a record after winning a business of its biggest rival.
The NZX 50 Index fell 9.73 points, or 0.3 per cent, to 3,291.48.
