A roundup of trading on major world markets:
NEW YORK – US stocks took a sharp plunge Thursday as fears over the contagion in the eurozone crisis trumped some mildly positive data on the US economy.
After reaching into positive territory halfway through the session, the Dow Jones Industrial Average was down 134.79 points (1.13 per cent) to 11,770.80 in closing trade.
The broad-based S&P 500 eased 20.63 (1.67 per cent) to 1,216.28, and the tech-heavy Nasdaq Composite lost 51.62 (1.96 per cent) to 2,587.99.
LONDON – European stock markets fell as France and Spain faced a sharp spike in borrowing costs and Germany warned Italy’s new prime minister to move fast to avert an even deeper debt crisis.
In London, the FTSE-100 index of top companies closed down 1.56 per cent at 5,423.14 points.
In Paris, the CAC-40 tumbled 1.78 per cent to 3,010.29 points and in Frankfurt the DAX 30 fell 1.07 per cent to 5,850.17 points.
Milan lost 1.43 per cent and Madrid shed 0.40 per cent as the Spanish finance minister insisted the country was not in any need of a bailout despite a sharp rise in borrowing costs.
Despite the gloomy backdrop, the euro rose to $US1.3519 from $US1.3451 in New York late on Wednesday, after falling overnight to $US1.3422, its lowest level since October 10.
Spain’s treasury had to pay a record 6.975 per cent when it raised 3.563 billion euros in a sale of 10-year bonds on Thursday.
The government had hoped to raise between three billion and four billion euros ($A4 billion to $A5.37 billion) with the bond sale and the interest rate paid is the highest since the creation of the euro single currency, according to Dow Jones Newswires.
France, too, was forced to pay sharply higher rates to raise 6.976 billion euros in new two- and five-year government bond sales.
HONG KONG – Asian markets were mixed but trade was cautious after two ratings agencies sounded alarm bells over the potential impact of the eurozone debt crisis on major banks.
Tokyo finished 0.19 per cent, or 16.47 points, higher at 8,479.63, Sydney rose 0.25 per cent, or 10.8 points, to 4,258.2 and Seoul added 1.11 per cent, or 20.60 points, to 1,876.67.
Hong Kong fell 0.76 per cent, or 143.43 points, to 18,817.47, while Shanghai closed 0.16 per cent, or 3.91 points, lower at 2,463.81
Fitch ratings agency warned that the contagion effects on US banks were “potentially large” if the crisis spreads beyond Greece, Ireland, Italy, Portugal, and Spain.
It pointed to the risks in France, where banks are being weakened by their own eurozone exposure, while Paris is cutting spending to avoid losing its AAA credit rating.
Fitch said the top five US banks had $US188 billion ($A186.76 billion) in exposure to France at the end of the second quarter.
Adding to the sense of fear was Moody’s decision to downgrade 10 German public-sector banks, saying they were now less likely to receive state support if needed.
The warnings highlighted the possible knock-on effects for Asian investors.
Shanghai dealers were little moved by the Chinese central bank’s announcement that it would “fine-tune” monetary policy, raising hopes that credit restrictions imposed in the past year will be relaxed.
In currency markets, the euro fetched $1.3485 and 103.72 yen, from $1.3451 and 103.70 yen in New York late Wednesday.
The dollar was at 76.91 yen, from 76.96 yen.
Singapore’s Straits Times Index closed down 1.04 per cent, or 29.19 points, to 2,778.25.
WELLINGTON – Wellington closed flat, edging 0.69 points lower to 3,280.73.
Telecom fell 1.0 per cent to NZ$2.525, while gaming group Sky City Entertainment rose 0.9 per cent to NZ$3.53.
