European share prices ended lower after Moody's
announcement, ending a two-week rally, while Wall Street was little changed
after early gains on upbeat US economic data.
Precious metals prices came under pressure as the US dollar
rose. Oil gained following an unexpectedly large drop in US inventories.
US Treasuries saw their early flight-to-safety buying
momentum wane, but the 10-year benchmark note held modest gains while the
30-year bond lost more than half a point.
Spanish government bonds reversed early losses. The 10-year
government bond yields shot up to a high of 6.43 percent before falling past
Tuesday's closing level to 5.48 percent, down 7 basis points for the day.
Spain will hold a 10- and 15-year bond auction on Thursday.
The euro fell to a record low against the Swiss franc of
1.2758 francs on the EBS trading platform before recouping to 1.2787, off 0.4
percent.
Against the dollar the euro fell 0.91 percent at $1.3262.
The greenback rose 0.49 percent to 84.04 against the yen. Against major
currencies the US dollar was up 0.79 percent.
Moody's cited concerns about Spain's mounting debt and 2011
funding needs. The decision included the caveat that while the Aa1 rating could
be cut, it does not expect Madrid to have to follow Greece and Ireland in
requiring a European Union bailout.
US stocks rose early on economic data. In midday trade, the
Dow Jones Industrial Average rose 14.27 points, or 0.12 percent, to 11,490.81.
The Standard & Poor's 500 Index fell 2.76 points, or 0.22 percent, at
1,238.83. The Nasdaq Composite Index lost 1.61 points, or 0.06 percent, at
2,626.11.
However, the Moody's report on Spain cramped the style of
European investors.
The FTSEurofirst 300 index of top European shares closed
down 0.46 percent at 1,127.25. The index was up over 6 percent in the 10 days
leading into the announcement on Spain.
Share prices in Japan slipped from Tuesday's seven-month
closing high. The benchmark Nikkei stock index fell 0.07 percent.
The price of crude oil rose after a government report showed
oil inventories fell much more than expected last week. Crude for January
delivery rose 16 cents a barrel to $88.44, up 0.22 percent on the day.
Spot gold prices fell $10.75 to $1,385.10.
