NEW YORK: World stocks erased the year's gains yesterday as investors fled risky investments for safe-haven assets on concerns about the euro zone's deepening debt woes, while US stocks lost ground after the market debut of social network Facebook.
Brent crude briefly slipped below $107 per barrel to its lowest in 2012 as the euro zone crisis raised fears of a global slowdown that could dent oil demand. The euro hovered near a four-month low, while benchmark 10-year German bond yields hit a record low.
World stocks, as measured by the MSCI index, dropped 0.7 percent and to a level below where they began the year, having relinquished all the first-quarter gains fueled by the European Central Bank's injection of more than 1 trillion euros. The index was on track for a sixth day of losses.
Riskier assets were all heading for big weekly losses, while German borrowing costs hit record lows.
Investors were unnerved by a ratings downgrade of 16 Spanish banks by Moody's Investors Service and an unexpected contraction in US regional factory activity reported on Thursday.
Sentiment has soured to such an extent that an opinion poll showing Greeks are returning to establishment parties that support the country's bail-out had little impact.
If Greeks do vote for the establishment politicians on June 17, Greece's place in the euro zone would look more secure and the threat of contagion engulfing countries such as Spain would diminish.
The Dow Jones Industrial Average was down 18.39 points, or 0.15 percent, at 12,424.10. The Standard & Poor's 500 Index was down 1.33 points, or 0.10 percent, at 1,303.53. The Nasdaq Composite Index was up 1.82 points, or 0.06 percent, at 2,815.51.
The S&P has fallen 6.7 percent so far in May, and while volatility is expected to continue, some analysts were forecasting a near-term rebound as valuations become more attractive.
Social networking site Facebook raised about $16 billion in one of the biggest initial public offerings in US history. The shares were last trading up 6.2 percent at $40.38, and traded as high as $45.
The FTSEurofirst 300 of leading European shares slid 1.1 percent, falling for a fifth day.
In the foreign exchange market, the euro fell to 100.17 yen, its lowest since early February, before recovering.
Brent crude was down 18 cents at $107.31 a barrel.
Benchmark 10-year German bond yields hit a record low of 1.396 percent and two-year yields also fell to their lowest-ever level at just 0.028 percent.
Greece has captured the headlines in recent days but the much larger Spanish economy also poses a threat.
Spain's banks, saddled with bad loans after a property boom collapsed, may need a bailout that would strain Madrid's already stretched finances and possibly require an international bailout regardless of any contagion threat from Greece.
US Treasury prices were lower. The benchmark 10-year US Treasury note was down 6/32 in price, the yield at 1.71 percent.
World stocks erase year's gains
