European stocks dropped for a fourth day after the region’s central bank paused lending to some Greek banks and the Federal Reserve signaled the American economy may need further stimulus. U.S. index futures and Asian shares rose.
Markets in Switzerland, Norway, Sweden, Denmark and Finland are among those closed for the Ascension holiday today.
The Stoxx Europe 600 Index (SXXP) declined 0.3 percent to 243.73 at 8:25 a.m. in London. The gauge has lost 3.3 percent in the last four sessions, erasing this year’s gains, as mounting concern that Greece will leave the euro area offset better-than- estimated reports on U.S. housing starts and industrial production. Futures on the Standard & Poor’s 500 Index increased 0.3 percent, while the MSCI Asia Pacific Index rallied 0.7 percent.
The European Central Bank said it will temporarily stop lending to some Greek banks to limit its risk as President Mario Draghi signaled the ECB won’t compromise on key principles to keep Greece in the euro area.
The Frankfurt-based ECB said yesterday it will push the responsibility for lending to some Greek financial institutions onto the Greek central bank until they have sufficiently boosted their capital. “Once the recapitalization process is finalized, and we expect this to be finalized soon, the banks will regain access to standard Eurosystem refinancing operations,” the ECB said in an emailed statement.
U.S. Economy
Several members of the Federal Open Market Committee said new actions could be necessary if the economy loses momentum or “downside risks to the forecast became great enough,” according to minutes of the FOMC’s April meeting released yesterday in Washington.
The U.S. Labor Department may report today that first-time claims for unemployment insurance fell by another 2,000 last week to 365,000, according to a Bloomberg News survey of economists.
Greece is heading toward national elections six weeks after the last vote, with its international bailout at stake.
Panagiotis Pikrammenos, head of Greece’s Council of State, the highest administrative court, was sworn in as head of the caretaker administration yesterday. The formal announcement of the election date, probably June 17, will be made after the new parliament is sworn in today and then dissolved.
Spain will today try to show investors it can keep funding itself as yields approach levels that pushed other nations into bailouts and foreign investors shun the country’s bonds.
The nation will seek to sell 1.5 billion euros ($1.9 billion) to 2.5 billion euros of bonds maturing in 2015 and 2016. Spanish 10-year bond yields rose as high as 6.5 percent yesterday, approaching the 7 percent mark that pushed Greece, Ireland and Portugal toward European rescue packages.
To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
Aust stocks close slightly lower - ninemsn
The Australian share market closed slightly lower as Asian markets rallied and concerns about Greece's future in the euro zone eased temporarily.
On Thursday, the benchmark S&P/ASX200 index dipped 8.1 points, or 0.19 per cent, to 4,157.4 points, while the broader All Ordinaries index dropped 6.2 points, or 0.15 per cent, to 4,208.5 points.
On the ASX 24, the June share price index futures contract was one point higher at 4,160 points, on volume of 40,793 contracts.
City Index chief market analyst Peter Esho said the Australian market had not performed too badly and that Asian markets were trading in positive territory during Thursday's session.
"There's been a bit of a shift towards optimism," he said.
"We've seen some steep losses recently, and maybe there's a case for things to bounce a little bit."
Mr Esho said investors still had Greece on their minds but at least that country was headed towards new elections.
Locally in the resources sector, global miner BHP Billiton was 28 cents higher at $32.77 as it turned its back on a silver, lead and zinc joint-venture project in north Queensland amid doubts over its potential.
Rio Tinto advanced 17 cents to $58.16.
Coalworks was steady at $1.02 as it stepped up its calls for shareholders to reject a $142 million takeover offer as well as a separate bid to dump its chairman and chief executive.
Among the major banks, Commonwealth Bank lost 75 cents to $51.02 as it announced a cash profit for the third quarter of fiscal 2012 of $1.75 billion, from $1.7 billion in the prior corresponding period.
Westpac sagged 46 cents to $21.22, ANZ dipped four cents to $21.57 and National Australia Bank retreated five cents to $24.35.
Elsewhere in the financial services sector, Insurance Australia Group added four cents to $3.38 after it said it would review its business in the United Kingdom for a possible sale.
Among other stocks, the owner of Sydney's Star casino, Echo Entertainment, nudged up one cent to $4.43 as it welcomed a report clearing the casino of wrongdoing over its investigation of sexual harassment claims against former boss Sid Vaikunta.
Construction giant Leighton Holdings was up 13 cents at $18.05, and appointed an external consultant to review its disclosure procedures after breaching laws earlier this year.
Building materials producer Adelaide Brighton was down two cents at $2.89 after it said it expected sales to improve slightly in 2012, but challenges remain because of weak construction activity.
The price of gold in Sydney closed at $US1,544.85 per fine ounce, up $US12.16 from $US1,532.69 on Wednesday.
Gold miner Newcrest was up 31 cents at $24.11.
Market turnover was 1.91 billion shares worth $5.13 billion, with 461 stocks up, 482 down and 399 unchanged.
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