LONDON — Global stocks recovered their poise Thursday, though ongoing unease over Europe's crisis kept sentiment in check on the last day of a month that has seen renewed turmoil across all financial markets.
Over the past month, the financial and political problems afflicting Greece, Spain and the 17-country eurozone as a whole have weighed heavily on world markets. U.S. stocks are set to suffer their first negative month since last summer, oil prices have slid and the euro has fallen to a near two-year low against the dollar.
"As we round off the worst monthly performance since last August, equities are marginally higher," said Mike McFudden, head of derivatives at Interactive Investor. "However, in the absence of decisive action to stem the rot in the eurozone sellers should reconvene soon enough."
In Europe, the FTSE 100 index of leading British shares was up 0.7 percent at 5,335 while Germany's DAX rose 0.3 percent to 6,289. The CAC-40 in France was 0.6 percent higher at 3,033.
Wall Street was poised for a solid opening with both Dow futures and the broader S&P 500 futures up 0.3 percent.
The debt crisis in Europe will likely remain the main focus of attention in the markets in June too, not least because Greece goes to the polls again in a general election that is widely-viewed as a referendum on the country's continued use of the euro.
Though opinion polls show that four in five Greeks want to retain the euro, others show that there's a split in support for parties that support the country's international bailout commitments and those that don't. The worry in the markets is that the anti-austerity parties will win, prompting a halt in Greece's bailout, which could lead to its bankruptcy and eventual exit from the eurozone.
Though Greece is the epicenter of the debt crisis, Spain has been a growing source of worry over recent weeks. Its banking system is under the microscope, especially after Bankia, the country's fourth-largest lender, last week announced it needed €19 billion ($23.8 billion) in state aid.
Investors are worried that Bankia's woes might be replicated across Spain's banking sector, which has suffered badly from the collapse of the construction sector. An economic recession and unemployment at almost 25 percent are fueling concern that the country will become the fourth euro country to be bailed out after Greece, Ireland and Portugal.
The problem for the eurozone is that Spain's economy alone is double the size of the three countries already bailed-out, and investors are skeptical whether a rescue operation can be mounted. The yield, or interest rate, on Spain's ten-year bond is around the 6.5 percent mark, and not far from the 7 percent threshold that is considered to be unsustainable in the long-run and eventually forced the other three bailouts.
Increasing numbers of experts say that the euro, in its current form, cannot survive.
"We may just be approaching the endgame where either the eurozone and/or the European Central Bank takes action to stem the bleeding or the whole thing collapses, with the trigger point being the trend in Spanish bond yields," said Gary Jenkins, managing director of Swordfish Research.
Ireland will hold a referendum on Thursday to decide whether the country should adopt Europe's newly-agreed fiscal treaty to put tough controls on governments' budget spending. The referendum is expected to approve the treaty, but similar polls were proved wrong when Ireland voted to reject the EU's last two treaties in 2001 and 2008.
A "no" vote would mainly damage Ireland itself, because its existing loans will run dry by the end of 2013 — and the treaty restricts future access to the EU's rescue fund to those nations that accept the new budget rules. Other eurozone countries would still be able to adopt the treaty even if Ireland rejects it.
In the currency markets, the euro recouped some recent losses, trading 0.2 percent higher at $1.24. On Wednesday, Europe's single currency fell to $1.2368, its lowest level since July 2010.
Earlier, Asian stocks fell sharply, tracking developments in Europe and the U.S. the previous day.
Japan's Nikkei 225 index tumbled 1.1 percent to close at 8,542.73, its lowest finish since mid-January. Hong Kong's Hang Seng lost 0.3 percent to 18,629.52 and South Korea's Kospi was down marginally at 1,843.47.
Oil prices recovered modestly too, with benchmark oil for July delivery up 14 cents to $87.96 per barrel in electronic trading on the New York Mercantile Exchange.
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Pamela Sampson in Bangkok contributed to this report.
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May 31, 2012 12:24 PM EDT
Copyright 2012, The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Emerging Stocks Head for Worst May Since 1998 on Europe - Bloomberg
Emerging-market stocks fell, poised for the biggest monthly drop in eight, on concern the European debt crisis will hurt the outlook for Asian exporters and as data showed the Indian economy grew less than estimated.
The MSCI Emerging Markets Index (MXEF) retreated 0.2 percent to 906.45 at 11:40 a.m. in London, heading for a second day of losses. The BSE India Sensitive Index (SENSEX) retreated 0.6 percent. Mol Nyrt. (MOL), Hungary’s largest refiner, rebounded from the lowest close in almost eight months, sending the BUX Index (BUX) 1.9 percent higher in Budapest. Russia’s Micex Index rose 0.5 percent.
The MSCI gauge has slumped 12 percent this month, set for its worst May performance since a 14 percent slide in 1998, on concern over Europe’s debt crisis and a slowing Chinese economy. In Spain, the cost of insuring against sovereign default rose to a record yesterday. Indian government data showed the nation’s economy grew 6.5 percent in the year ended March 31, less than the 6.7 percent projection in a Bloomberg survey.
“There is cloud of uncertainty over Europe, which is causing investors to turn risk averse,” Gopal Agrawal, chief investment officer at Mirae Asset India Investment Co. in Mumbai, said by phone today. “To us, what’s happening in Spain is a bigger concern than Greece.”
Indonesia’s Jakarta Composite index tumbled 2.2 percent, the most among Asian benchmark indexes.
Chinese Shares
The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong fell less than 0.1 percent, after having lost as much as 1.9 percent earlier in the session. The Shanghai Composite Index (SHCOMP) slid 0.5 percent.
The Philippine Stock Exchange Index (PCOMP) rose 1.5 percent to close at its highest since May 11 after the government said first-quarter gross domestic product grew 6.4 percent. It was the economy’s fastest expansion since 2010 and it topped all 21 estimates in a Bloomberg News survey.
Mol Nyrt. increased 3.5 percent, paring its monthly decline to 14 percent. Mol’s 3.9 percent plunge yesterday pushed its 14- day relative strength index to 25, below the 30 level that indicates to some analysts a stock is oversold.
The ISE National 100 Index (XU100) gained 0.9 percent in Istanbul.
Turk Hava Yollari AO (THYAO), the national carrier known as Turkish Airlines, gained 1.6 percent, rising for the first time in three days after parliament passed a measure banning airline workers from strikes amid the carrier’s dispute with its labor union.
Harmony Advances
Anadolu Efes Biracilik & Malt Sanayii AS (AEFES), the Middle East’s biggest brewer, jumped 2 percent after saying it was looking to expand in ex-Soviet and Eastern European markets.
The FTSE/JSE Africa All Share Index (JALSH) advanced 0.7 percent in Johannesburg.
Harmony Gold Mining Co. (HAR), Africa’s third-largest producer of the metal, rose 2.9 percent after agreeing to a new deal with Pan African Resources Plc for the sale of its Evander mine.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell three basis points, or 0.03 percentage point, to 419, according to JPMorgan Chase & Co.’s EMBI Global Index.
The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps fell four basis points to 342.
To contact the reporters on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
Financial struggles continue for Rodeo-based school district - San Jose Mercury News
RODEO -- The tiny John Swett Unified School District is still struggling to get its financial house in order after several years of fiscal difficulty, according to the adviser overseeing the situation for the county Office of Education.
John Swett is one of 176 statewide,including four in the East Bay, found to be in qualified status in February's Second Interim Status Report on school agency financial health. A qualified certification means the district may not be able to pay its bills in the current or two subsequent fiscal years.
The district laid off five teachers and a group of other employees to eliminate most of a $780,000 budget gap for the 2011-12 fiscal year, said financial adviser Paul Disario, a retired chief financial officer for several California school districts.
Now, it is trying to negotiate with its labor unions a trim to the $18,000 a year it spends on each employee's medical, dental and vision benefits to bring them closer to the state average, he said.
Two years ago, it negotiated a class-size increase from 20 to 28 for the early elementary grades after the state eliminated funding for class-size reduction and found about $500,000 in savings from special education, Disario said.
"We got a fiscal adviser, made a lot of cuts, got the union to make some concessions and kept from being taken over (by the state)," Superintendent Mike McLaughlin said.
Looming over the situation are the proposed income
and sales tax increases on the statewide November ballot.If the tax measure fails, schools will lose about 8 percent of their funding, or about $441 per student annually. John Swett would then follow Gov. Jerry Brown's fallback plan to reduce the school year by 10 days in addition to the five it has already cut, Disario said.
John Swett could also eliminate P.E. teachers at its middle school and reduce hours for custodians, cuts it recently restored, McLaughlin said.
The district has one librarian, one vice principal and one counselor covering all four of its schools.
"We're just hanging on, and we desperately need the (tax) initiative to go through," McLaughlin said.
A parcel tax to raise revenue is off the table after measures on the November 2010 and May 2011 ballots failed to gain the necessary two-thirds approval, McLaughlin said.
Both of the measures failed in part because of opposition from Conoco Phillips, the Houston-based oil company that operates a refinery in Rodeo, McLaughlin said.
"It's hard to get 66 percent in this (economic) environment and a large company throwing in a lot of money against it," he said.
The 1,600-student district covers Rodeo, Crockett, Port Costa and part of Hercules in West Contra Costa with one elementary school, a middle school, a high school and a continuation school.
US stocks waver; euro dives on Greece turmoil - Yahoo Finance
Stronger news about the U.S. economy stilled the ripples from Europe's latest political impasse Tuesday, pushing U.S. stocks between modest gains and losses.
The euro and European stocks plunged as trading in New York began after efforts to form a government in Greece collapsed. Newly-elected political leaders there disagree about whether to accept more international bailouts and continue with painful spending cuts.
In the U.S., stocks staged a mid-morning rally after word that confidence among U.S. builders rose to a five-year high in May. The index has risen for seven of the past eight months. Homebuilders rallied. Hovnanian Enterprises surged 10 percent, Lennar Corp. 4 percent and KB Home 3 percent.
Earlier, a survey by the New York Federal Reserve found that manufacturing activity in the New York region rebounded this month far more strongly than economists had expected.
The market's early rise deflated briefly, then stocks climbed at midday to new daily highs. By the afternoon, the indexes again were flat for the day.
The Dow Jones industrial average fell 12 points to 12,683 as of 3 p.m. EDT. Losses by most of its components were offset by gains for JPMorgan Chase and Bank of America, shaking off recent losses related to the surprise $2 billion trading loss that JPMorgan announced last week.
The Standard & Poor's 500 index fell two to 1,336. The Nasdaq composite index rose seven to 2,909.
Stocks are having their worst month in the past eight. For the month, the Dow is down 518 points — about 4 percent — after hitting a four-year high on May 1. The average is on track to post its first monthly loss since September, when it fell 6 percent.
If the Dow closes higher, it will be only its second up day since the peak reached on May 1.
The euro fell as low as $1.2730, a four-month low against the dollar, after Greek socialist leader Evangelos Venizelos declared that attempts to form a governing coalition there had failed and new elections will be held next month. If voters elect parties opposed to the terms of the country's financial rescue, Greece could be expelled from the euro, shocking global markets.
Stock indexes in France, Britain and Germany gave up earlier gains after Venizelos' remarks and closed sharply lower.
Aside from fears about Europe, stocks are suffering because a string of weaker economic data in recent weeks has dampened hopes for corporate performance in the current quarter ending June 30, said John Butters, senior earnings analyst at FactSet, a financial data provider.
For the first month of the quarter, as earnings came in strong and stocks rose, analysts' expectations for second-quarter earnings growth held steady at 6 percent, Butters said. In the two weeks since then, as the U.S. economy appeared to soften and Europe's problems reemerged, analysts cut their estimates for S&P 500 earnings growth to 5 percent, he said.
Analysts expect earnings to decline this quarter for half of the 10 industry groups in the S&P 500, Butters said. He said many expect a strong rebound in the fourth quarter as demand returns in emerging markets such as China and India.
Among other stocks making big moves:
— Home Depot slumped 2 percent, the most of the 30 companies in the Dow, after the world's biggest home-improvement company forecast revenue that was below what Wall Street analysts were expecting.
— TJX Cos., which owns the T.J. Maxx, Marshalls and HomeGoods store chains, shot up 7 percent, the most in the S&P 500 index. The discount retailer reported a 58 percent surge in first-quarter income and raised its full-year profit forecast.
— Avon Products Inc. fell 11 percent, the most in the S&P 500 index, after Coty Inc. canceled its unsolicited, $10.7 billion bid for the cosmetics retailer.
— Groupon leapt 6 percent after the online daily discount site reported first-quarter revenue that exceeded analysts' expectations.
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Daniel Wagner can be reached at www.twitter.com/wagnerreports.
Stocks slide on weak economic data - MSN Money
Updated at 12:06 p.m. ET
By Shanthi Bharatwaj
Stocks were off their lows but remained in the red Thursday after reports showed a disappointing pace of job creation and slower economic growth than initially thought.
Demand for haven assets continued to surge amid heightened eurozone uncertainty, with the yield on 10-year Treasurys still hitting record lows.
The Dow Jones Industrial Average ($INDU) was down by 51 points at 12,368. Earlier in the session, the index fell to as low as 12,316. The S&P 500 ($INX) was lower by 8 points at 1304. The Nasdaq ($COMPX) was dropping 25 points at 2,812.
Twenty-three out of the 30 Dow components were trading in the red, with Caterpillar (CAT), Exxon Mobil (XOM) and Bank of America (BAC) leading the index lower.
Shares in capital goods, energy and materials were the worst performers.
The Dow, down 6% so far, has had only five positive trading sessions over the month, its worst performance since May 2010, when concerns about Greece first emerged. The Nasdaq has lost nearly 7%.
Worries about the fate of the euro and the impact of a global slowdown has led investors to abandon equities and seek safe havens such as U.S. treasury bonds.
"A lot of people really don't trust this market. Maybe they say the market is rigged or it's insider's game, so you just see a lot of people taking their money out of U.S. equities and putting them into bonds and looking for capital preservation instead of the risk-on trade," Joe Bell, senior equity analyst at Schaeffer's Investment Research, said.
"The stunning thing to me about . . . the way the market is behaving now is, when you look at 30-year Treasurys, they're behaving as if a Lehman-like event has already happened," said Michael Gayed, a chief investment strategist at Pension Partners LLC.
Investors betting on U.S. economy withstanding global pressures were in for some disappointment Thursday as a raft of economic data pointed to slowing growth.
ADP's employment report showed companies created 133,000 jobs in May, underwhelming expectations. Economists had expected the private sector to have added 148,000 jobs in May, according to Thomson Reuters. In April, companies created 119,000 jobs
Earlier Thursday, global outplacement firm Challenger, Gray and Christmas said employers announced plans to lay off 61,887 workers in May, an eight-month high and up 67% from a year earlier.
The Labor Department said initial jobless claims for the week ending May 26 jumped by 10,000 to 383,000, higher than the 370,000 economists were expecting.
The reports come ahead of Friday's all-important jobs report. The Labor Department is expected to say that the economy created 150,000 jobs in May, up from 115,000 in April, according to economists surveyed by Thomson Reuters.
Another month of bad news on jobs could further dampen investor sentiment and revive expectations that the Federal Reserve will do more to boost the economy.
The Bureau of Economic Analysis at the Department of Commerce said the economy expanded at a rate of 1.9% during the first quarter, down from the advance estimate of 2.2%. That was in line with expectations.
The Institute for Supply Management said business activity in the Chicago region significantly slowed, with the purchasing managers' index coming in at 52.7, down from 56.2 in April.
The consensus expected Chicago PMI to come in at 57 for May. A reading over 50 indicates expansion.
July oil futures were lower by $1.26 at $86.56 a barrel, and August gold futures were lower by $1.6 at $1,564.10 an ounce in volatile trading.
The benchmark 10-year Treasury was rising by 22/32, lowering the yield to another record low of 1.549%, and the greenback was up by 0.1%, according to the dollar index.
The euro was trading flat against the dollar at $1.235 near its two-year low.
European markets finished in the negative Thursday, reversing an early bounce, as markets were unable to shake off concerns about the region's debt crisis.
The FTSE in U.K. finished flat, while the DAX in Germany lost 0.6%.
Stocks in the region had shown signs of stabilizing earlier in the session amid a clutch of better-than-expected economic data. Inflation in the 17-nation area fell to 2.4% from 2.6%, the slowest pace since February 2011, while the German unemployment rate fell to 6.7% in April.
Asian markets sold off, tracking the risk-off trade in European and U.S. markets on Wednesday. Hong Kong's Hang Seng dropped 0.3%, while Japan’s Nikkei declined 1%.
In corporate news, shares of Talbots (TLB) jumped more than 90% after it agreed to be taken private by Sycamore Partners at $2.75 per share.
The nation's retailers, reported mostly better-than-expected same-store sales numbers, though some big names disappointed.
Gap (GPS) said comparable-store sales rose 2% in May, less than the 3.1% jump analysts were predicting. Shares were down 1.8%.
Target (TGT) reported a 4.4% growth in same-store sales in May, beating analyst estimates. Shares were rising 0.5%.
Costco (COST) said same-store sales rose 4%, short of the 4.3% analysts were expecting. Shares were edging higher by 0.7%.
TiVo (TIVO) reported weak first-quarter results and second-quarter guidance. The digital video recording company posted a loss of 17 cents a share on revenue of $67.8 million. Analysts were expecting a loss of 15 cents a share on $54.89 million in service and technology revenue.
For its fiscal second quarter, TiVo said it expects service and technology revenue to be between $53 million and $55 million and projects a net loss of $28 million to $30 million. Analysts expect revenue of $56.5 million and a loss of $27 million.
Shares were declining 6.1%.
Ciena (CIEN) shares were surging 7.5% after the network equipment maker reported an adjusted profit of 4 cents per share, beating expectations of a loss of 3 cents per share.
IMF says not in talks with Spain on financial help - The Guardian
Materials Stocks Have Taken a Beating, But I’m Still Bullish - Investorplace.com
It’s been night and day for materials stocks in 2012. Many stocks in this sector popped early in the year, but have dropped hard recently to right where they were back in December.
So what’s going on? Simply put, many investors are worried the recovery is running out of gas — or worse, that it never was a recovery at all.
As America struggles, regions of Europe slip into recession and China starts to slow down, many are afraid materials companies will see already meager demand dry up and send these companies even lower.
That’s nonsense.
Consider this: Alcoa (NYSE:AA) hasn’t traded under $8.40 since May 2009. And ArcelorMittal (NYSE:MT) hasn’t traded this low since 2004!
Do we really think these companies are worse off now than back then? Do we really want to ignore that when Alcoa was last priced this low in 2009, as demand was weak and the company was restructuring, it delivered a 35% gain across the next 12 months?
I just don’t get it. Yes, there are many risks to the global economy out there. Yes, we’ve known about weak aluminum and steel demand for years. Yes, we’ve been on the eurozone death watch for months. The story of China’s slowdown, the softness in housing … I get it.
But what’s new here?
Rather than focus on old headlines, I’m interested in the momentum that Alcoa and ArcelorMittal are gaining compared with their crisis-level lows. And you should be too, now that shares are priced at the same levels or lower.
Consider that Alcoa slashed its global work force by 13% in 2009, laying off a massive 13,500 workers. ArcelorMittal also laid off thousands of workers in 2009, cutting output to just 70% of capacity back then and regularly idling facilities to bleed down oversupply ever since.
The restructuring has made both companies soundly profitable once more. And believe it or not, they actually are seeing glimmers of growth.
Alcoa has seen nine straight quarters of year-over-year revenue increases. ArcelorMittal has seen seven in a row. Admittedly, both stocks are forecast to see slight earnings declines in 2012 compared with 2011 if forecasts hold — but those numbers are light-years ahead of 2009. Also, both AA and MT are right around 52-week lows, so it’s hardly like you’re buying a top before a flop.
More good stuff for ArcelorMittal: The steel giant has a forward P/E of less than 5 right now — and a 4.5% dividend to boot!
And for Alcoa: Aluminum buyers in Japan, Asia’s largest importer, just agreed to pay a record premium to aluminum producers next quarter as the nation continues to ramp up its industries and rebuilds in the wake of the disastrous earthquake and tsunami last year. This reinforces my belief that between baseline demand and minimal output, base metal prices like aluminum and steel have nowhere to go but up.
There are risks in these stocks, to be sure. Lingering conflicts between management and union efforts at ArcelorMittal threaten disruptions to the business or increased labor costs. And Alcoa posted its first quarterly loss since 2009 in its fiscal fourth quarter as metal prices tumbled.
There also are some bigger-picture risks to acknowledge for these stocks and the sector in general:
- Materials stocks are volatile, so even if we see a rally in these stocks across the next few months, it might not last long — as we saw with the jump in the first eight weeks of the year that evaporated just as quickly.
- Inflation and the dollar can have a big factor on metal prices and the profitability of these companies. Many people (justifiably) think that the dollar’s current strength is simply due to the disaster in Europe rather than the merit of the U.S. itself, and it will only take a few more stupid debt ceiling headlines to change that in a hurry.
- As many will point out, some of the previous rallies in equities were based on Fed action or sentiment rallies, so investing based on logical assumptions or fundamental trends might never amount to anything.
- Then there are the Armageddon scenarios where a eurozone meltdown obliterates the global economy — but if you believe that’s the case, frankly, you should be building a bunker instead of reading this article.
However, even with those factors in play, I think the bottom line is that materials stocks like Alcoa and ArcelorMittal are the ultimate cyclical stocks. When the economy ramps up, construction rebounds and durable goods are in demand, these companies will take off.
I, for one, think that a year or two from now we will be in a true self-sustaining recovery — and that means AA and MT are bargains.
Maybe you think it’s a Pollyanna outlook to expect that a recovery is coming at all in the next few years, or maybe you think it’s naïve to say Alcoa and Arcellor Mittal have “right-sized” themselves enough to weather any short-term difficulties in the next six months. If so, I would love to hear from you and have you make your case. Please share your thoughts below in the comment section or drop me a line at editor@investorplace.com.
But to me, I think it’s a relatively low-risk investment to tread water in AA or MT and wait for sunnier times to lift shares. That’s why I personally own Alcoa stock and think AA is your best stock to hold for the rest of 2012.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves owned a position in AA.
Updated: Financial situation worsens - PL spokesman - Times of Malta
(Adds government's reaction)
The government’s financial situation in April continued to worsen at an alarming rate, the Labour Party’s spokesman for finance said.
Karmenu Vella said that according to figures published by the National Statistics Office, the deficit had reached €232 million, which was the highest ever in the first four months.
The deficit, Mr Vella said, was €90 million more than in the same period last year. But, in reality, it was much higher as the €232 million figure did not include the expenditure on the new parliament project.
Mr V ella said it was clear that the problem was in recurrent expenditure, which had increased by 11 per cent. This was at a time when the economy grew at a much slower rate in nominal terms.
According to the latest financial figures, debt servicing expenditure increased by €5 million in the first four months when it had been planned to increase by €2.5 million for the whole of 2012.
Expenditure on social benefits (programmes and initiatives) increased by €57 million in the first four months when this had been planned to increase by €37 million (€20 million more than planned).
Contributions to government entities had to go up by €13.5 million in a year but these had already gone up by €12.7 million in the first four months.
Mr Vella said that, in the first four months, the government had already surpassed its aim for the year by around €87 million.
On debt, he said that this had gone up to €4,676.1 million. If the €100 million extra budgetary units and the €15 million from the European Financial Stability Fund were added to that, the debt would reach €4,791 million. This was already over the government’s €122 million target for the whole year.
In these circumstances, the government should explain if it still believed its targets and if it was confident that they would be met. It should say what measures it would take during the rest of the year for the country’s precarious financial situation to return to the established targets.
In a reply, the government said that while the opposition continued with its work to hinder investment, in a report on all EU states the European Commission said yesterday that the Maltese economy was growing at a higher rate than the EU average and noted that the country’s deficit was below the three per cent European limit.
The government said the opposition tried to give the impression that the deficit was growing month after month quoting statistics of particular months without giving the full picture
The country’s strong financial situation was certified repeatedly in the past months including by the Eruoepan Commission, the International Monetary Fund and the International Labour Organisation.
GLOBAL MARKETS-Stocks weakest in 8 mos; US bond yields hit lows - Reuters UK
* S&P 500 and euro post sharpest monthly loss since Sept
* Oil prices down 16 pct for May, worst since Dec 2008
* U.S. Treasury yields hit fresh 60-year lows (Updates with markets' close)
By Barani Krishnan
NEW YORK, May 31 (Reuters) - Stocks ended May with their largest loss in eight months and commodities also took a battering after a spate of worrying U.S. economic data on Thu rsday hit markets already reeling from Europe's debt troubles.
The euro had its worst performance since September too, repeatedly hitting a near two-year bottom.
U.S. bond yields fell to record lows as fears about Spain's troubled banks and Greece's possible exit from the euro zone spurred a global race for safe assets.
Many investors braced for another round of risk aversion on Friday should the monthly jobs report from the U.S. government contain weaker numbers than preliminary data issued by a payrolls processor on Thursday.
"Europe is the main issue, no question about it, but you have a supporting cast from the U.S. data," said Paul Zemsky, head of asset allocation at ING Investment Management in New York.
Spain remained the focal point of traders on growing speculation that Madrid would sooner or later ask for outside help to bail out its banks. Wall Street pared some of the day's losses on a report -- later denied -- of possible International Monetary Fund aid. But the European Commission has offered direct aid for a euro zone rescue fund to recapitalize distressed Spanish banks and more time for Spain to reduce its budget deficit.
Markets got an inkling of what was to come in Friday's U.S. jobs report after payrolls processor ADP said private employers created 133,000 jobs in May, fewer than the expected 148,000. New claims for unemployment benefits rose by 10,000 for the fourth straight weekly increase, the Labor Department reported.
Investors were dismayed by another report on economic growth and manufacturing in the U.S. Midwest that pointed to a slowdown.
At the close, the Dow Jones industrial average was down 26.41 points, or 0.21 percent, at 12,393.45. The Standard & Poor's 500 Index lost 2.99 points, or 0.23 percent, at 1,310.33. The Nasdaq Composite Index fell 10.02 points, or 0.35 percent, to 2,827.34.
For the month, the S&P 500 was down 6 percent -- its sharpest loss since September.
European stocks closed down 7 percent for May and global equities tumbled 10 percent -- also marking their worst showing since September.
Commodities fell even more, with crude oil futures plunging 15 percent for the month both in London and New York for their biggest loss since December 2008. Copper lost 11 percent for the month.
"There's a lot of instability in the world, and along with the weak economic signals there's going to be significant volatility that I don't expect to end anytime soon," said Don Steinbrugge, managing partner of Agecroft Partners in Richmond, Virginia.
The benchmark 10-year U.S. Treasury note rose 12/32 in price, its yield at 1.578 percent -- down from Wednesday's 1.6 percent levels, which already marked a 60-year bottom.
NO ECB HELP
In Europe, ECB President Mario Draghi ruled out hopes that the central bank would step in to ease the pressure in financial markets as EU leaders grappled with measures to tackle structural problems in the debt crisis.
"Can the ECB fill the vacuum of lack of action by national governments on fiscal growth? The answer is 'No,'" Draghi told the European Parliament. "Can the ECB fill the vacuum of the lack of action by national governments on the structural problem? The answer is 'No.'"
Concerns over Europe's debt crisis and the lack of a clear policy response have been rising since Spain unveiled unconvincing plans to recapitalize nationalized lender Bankia , raising the possibility it could need outside help.
Those worries kept Spain's 10-year bond yields at around 6.6 percent, not far from Wednesday's euro-era high of 6.79 percent and close to the crucial 7 percent mark, which has led to troubled nations like Portugal and Ireland needing bailouts.
The euro was last at $1.2358 to the dollar, after setting a 23-month low at $1.2335. The single currency was flat on the day and down nearly 7 percent on the month.
The flight from Spanish debt and Italian bonds, which are under threat of contagion from Spain, has boosted demand for the safety offered by German government paper.
Germany's two-year bonds traded just above zero percent on Thursday, while benchmark 10-year Bund yields hovered around their record low of about 1.25 percent.
US STOCKS-Wall St to open slightly lower after jobs, GDP data - Reuters UK
* Initial claims rise, ADP below expectations
* GDP revised downward
* Costco slips after same-store sales miss expectations
* Futures up: Dow 21 pts, S&P up 2.1 pts, Nasdaq 1 pt (Adds quote, updates prices)
NEW YORK, May 31 (Reuters) - U.S. stocks were set for a slightly lower open on Thursday, after data pointed to an economy that may have stalled while investors grapple with the euro zone's debt crisis.
A report by private payrolls processor ADP showed private employers created 133,000 jobs in May, fewer than the expected 148,000 while new claims for unemployment benefits rose by 10,000 for the fourth straight weekly increase. The data comes ahead of Friday's key payrolls report.
Commerce Department data showed economic growth in the United States was slightly slower than initially thought as gross domestic product was revised down to a 1.9 percent annual rate from last month's 2.2 percent estimate.
"The markets have become less optimistic and much more accustomed to seeing numbers that are just not impressive," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
"It is clear the markets are pricing in a substantial slowdown moving forward in terms of GDP growth, employment gains, productivity gains - it's not encouraging for bulls."
The S&P 500 fell 1.4 percent on Wednesday, its biggest decline since May 17, as anxiety over the euro zone's fiscal crisis sent investors away from riskier assets and into safe havens such as U.S. Treasury bonds. The CBOE volatility index, a gauge of market anxiety, jumped 14.8 percent, its largest daily gain in almost three months.
European shares, which had steadied, turned negative after the U.S data. The FTSEurofirst 300 was off 0.1 percent.
The European Central Bank increased pressure for a joint fund to guarantee bank deposits in the euro zone, saying the region needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk.
The benchmark S&P index is on pace for its worst monthly decline since September on increasing concern over the euro zone's debt crisis and a spate of tepid domestic economic data.
U.S. equities have been closely linked to the fortunes of the euro, with the 50-day correlation between the currency and the S&P 500 at 0.92. Expectations of an Irish vote in favor of Europe's fiscal pact helped the euro recover from a near two-year low against the dollar.
S&P 500 futures rose 2.1 points and were just below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures rose 21 points and Nasdaq 100 futures rose 1 point.
Other data on Thursday includes the May index of manufacturing activity from the Institute for Supply Management Chicago at 9:45 a.m. (1345 GMT). Economists in a Reuters survey forecast a reading of 56.5 compared with 56.2 in April.
Retailers will be in focus as they report monthly same-store sales results. Several top retailers reported stronger-than-expected sales in May, as shoppers overcame growing anxiety about the U.S. economy and the job market.
Target Corp advanced 0.7 percent in premarket after posting better-than-expected May same-store sales.
Ciena Corp climbed 5.4 percent to $12.49 in premarket after the network equipment company posted a surprise second-quarter adjusted profit.
Joy Global Inc slipped 4 percent to $56.70 premarket after the mining equipment maker said it expects order rate to moderate and revenue to remain flat for the next few quarters. (Editing by Bernadette Baum, Dave Zimmerman)
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