LONDON/NEW YORK: The euro hit a seven-month low to the dollar on Thursday as concern over Greece’s fiscal woes spread to other highly-indebted euro zone countries, while world stocks accelerated their fall after disappointing US labor market data.
The European Union said on Wednesday Greece’s plans to cut the budget gap from 12.7 percent of gross domestic product in 2009 to below 3 percent in 2012 would not be easy to implement but vowed to hold Athens to its pledges.
“The euro remains vulnerable and the market has now turned its attention to Spain and Portugal,” said BNP currency strategist Ian Stannard. “Rallies have been short-lived.” The euro fell nearly 1 percent to $1.3761,, its lowest since June 16, while the dollar rose 0.58 percent against a basket of major currencies. The dollar fell 2 percent against the yen, to 89.15 yen.
Global stocks slumped as the rising dollar hurt commodities prices, and a surprising rise in unemployment insurance claims underscored the slack pace of recovery in the US Commodities prices also slumped as gold fell more than 4 percent to three-month lows and crude oil futures sank more than 5 percent.
US light sweet crude oil fell $4.10 to $72.88 per barrel, and spot gold prices fell $46.30, or 4.17 percent, to $1062.90. The Reuters/Jefferies CRB Index was down 7.56 points.
The Dow Jones Industrial Average dropped 206.47 points, or 2.01 percent, to 10,064.08. The Standard & Poor’s 500 Index declined 25.40 points, or 2.31 percent, to 1,071.88 and the Nasdaq Composite Index slid 47.58 points, or 2.17 percent, to 2,143.33.
The MSCI world equity index fell 2.43 percent while the FTSEurofirst 300 index lost 2.75 percent.
Japanese stocks fell 0.46 percent with Toyota Motor sliding further on its recall woes. Emerging stocks dropped 2.63 percent.
Demand for US Treasury debt pushed yields lower, amid a retreat in global stocks and fears over potential defaults by European governments and the labor report.
