US stocks fell, while the euro and commodities erased early rallies, as optimism over Spain's bailout plan gave way to skepticism that the rescue will succeed in taming the European debt crisis. Treasuries advanced.

The Standard & Poor's 500 Index lost 0.8 per cent to 1,314.89 at 3:18 p.m. in New York after climbing as much as 0.7 per cent in the first minutes of trading. The euro weakened 0.2 per cent to $US1.2494 after surging 1.2 per cent. Oil declined 2.7 per cent to $US81.86 a barrel, reversing a 3 per cent jump, and the S&P GSCI Index of commodities slid 1.4 per cent. Ten-year Treasury note yields decreased four basis points to 1.59 per cent after surging nine basis points earlier.

Spain asked euro-region governments over the weekend for as much as 100 billion euros ($US126 billion) to help shore up its banking system. Spanish and Italian bonds rallied as European markets opened, only to erase the gains as costs of default swaps to protect Spanish government debt rose. Spain's benchmark stock index reversed an almost 6 per cent gain.

"The Spanish deal is another Band-Aid," Matt McCormick, who helps oversee $US6.2 billion at Bahl & Gaynor Inc. in Cincinnati, said in a telephone interview. "Many investors are viewing this with skepticism. The problem is not going to be fixed by this amount. It's not a solution, and people know the difference. Expect more volatility not less."

Lingering Crisis

European officials have failed to control the debt crisis that started in Greece at the end of 2009 and has now required a bailout of the euro area's fourth-largest economy. Concern about a deepening of the region's turmoil almost drove the S&P 500 into a bear market last year as the index tumbled more than 19 per cent between April 29 and Oct. 3. Since then, the index surged as much as 29 per cent to a four-year high in April, then lost 6.6 per cent through last week.

Financial, commodity and technology shares fell at least 0.6 per cent to lead losses among the 10 main groups in the S&P 500, while telephone and utility companies gained. Hewlett- Packard Co., Bank of America Corp., Caterpillar Inc. and Microsoft Corp. lost more than 1.7 per cent for the biggest declines in the Dow Jones Industrial Average.

Nvidia Corp. rallied 2.3 per cent after Apple Inc. said its latest MacBook Pro computer uses a new Nvidia graphics chip. Apple slipped 0.9 per cent, erasing a 1.4 per cent rally, as it introduced new computers at its developers conference.

Thirty-year US bonds rose for the first time in six sessions, sending yields down three basis points to 2.71 per cent. The rate is up from a record low of 2.5089 per cent on June 1.

The average yield on bonds issued by the Group of Seven nations has fallen to 1.120 per cent from 3 per cent in 2007, Bank of America Merrill Lynch index data show. Germany's two-year note yield fell below zero for the first time on June 1, while Switzerland's has been negative since April 24, meaning investors are paying for the right to lend the nation money.

European Shares

The Stoxx Europe 600 Index ended the session little changed after increasing as much as 1.9 per cent. Banco Santander SA fell 0.3 per cent, erasing a gain of as much as 9.7 per cent. Bankinter SA rose 0.5 per cent and Banco Bilbao Vizcaya Argentaria SA was little changed after each jumped more than 10 per cent earlier.

The IBEX-35 Index of Spanish stocks slipped 0.5 per cent, reversing a 5.9 per cent rally. Greece's ASE Index rose 0.8 per cent, paring an earlier 4.5 per cent jump.

France's CAC 40 Index lost 0.3 per cent The benchmark gauge surged as much as 2.3 per cent earlier as industrial production increased 1.5 per cent in April. Economists had predicted a 0.1 per cent decline.

The Dollar Index was little changed after earlier slumping as much as 1 per cent. Norway's krone strengthened against 15 of 16 major peers, climbing 0.2 per cent versus the dollar, after data showed consumer prices rose more than estimated last month.

Spain's two-year yield rose 28 basis points to 4.57 per cent, after falling to as low as 3.94 per cent, on concern investors holding the securities may rank behind official creditors in seniority following the bailout. Italy's 10-year yield jumped 26 basis points to 6.03 per cent, the highest since January.

"We've seen these dominoes fall: Greece, Ireland, Portugal, now Spain is getting on the dole and the next big one to be watching is Italy," Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co. in New York, told Bloomberg Television. "And when Italy comes into pressure, I'm suggesting we have to be careful with France too."


Nickel, sugar and copper rose at least 1.7 per cent to lead gains among 11 of 24 commodities in the S&P GSCI Index, while natural gas and oil fell the most.

Goldman Sachs Group Inc. said today it expects a 29 per cent return for commodities over the next 12 months. Gains for raw materials will be led by a 41 per cent jump in energy and 23 per cent gain in industrial metals, Goldman Sachs said.

The MSCI Emerging Markets Index rose 0.9 per cent. The Hang Seng China Enterprises Index of mainland companies climbed 2.4 per cent, the most in two months, after China's exports grew last month at more than double the pace analysts estimated and crude oil imports rose to a record. Overseas shipments climbed 15.3 per cent from a year earlier, exceeding all 29 estimates in a Bloomberg News survey. Benchmark gauges in South Korea, Taiwan, Thailand and Indonesia increased at least 1 per cent.

India's Sensex slipped 0.3 per cent, reversing a 1.1 per cent gain after S&P said the country may lose its investment-grade rating.