Bloomberg News

Euro, Stocks Drop as Europe Summit Optimism Fades; Oil Retreats

October 26, 2011

Oct. 26 (Bloomberg) -- The euro and stocks fell, erasing early gains, amid concern that European debt-crisis talks were stalling. Oil retreated from a 12-week high after U.S. supplies increased, while Treasuries pared losses.

The euro slipped 0.6 percent to $1.3831 at 11:05 a.m. in New York after climbing as much as 0.5 percent. The Standard & Poor’s 500 Index lost 0.2 percent to 1,226.04, erasing a 1.2 percent rally. Crude oil fell 2.2 percent to $91.10 a barrel, while yields on 10-year Treasury notes were up three basis points at 2.14 percent after climbing seven points earlier.

Optimism that European Union leaders would complete plans to tame the region’s government debt crisis today was tempered as officials said talks with banks on the size of losses from Greek debt were deadlocked and the capacity of the rescue fund may not be determined for another month. Stocks and the euro rallied earlier after Germany’s lower house of parliament approved enhancing the bailout fund and U.S. durable goods orders topped forecasts.

The euro weakened against 12 of 16 major peers, with Canada’s dollar and Japan’s yen rallying 0.8 percent versus the common currency. Shares of the region’s banks erased earlier gains and were the biggest drag on the Stoxx Europe 600 Index, falling 0.9 percent as a group.

EU talks with banks on bondholder losses as part of a second Greek rescue package are deadlocked and have been suspended, an EU official said today.

Debt Talks

EU leaders may ask national finance ministers to determine the capacity of the expanded European Financial Stability Facility by the end of November, an EU official said. The leaders meeting in Brussels later today will back two EFSF leveraging options set out last week, the official said on condition of anonymity because the meeting hasn’t taken place.

Gauges of consumer and technology companies lost at least 1.5 percent to lead declines in six of the 10 main industry groups in the S&P 500. Inc., the world’s largest Internet retailer, tumbled 11 percent after its profit plunged as it ramped up spending on new products. Boeing Co. led gains in the Dow Jones Industrial Average, climbing 3.9 percent as earnings topped analysts’ estimates.

--Editor: Michael P. Regan

To contact the reporter on this story: Michael P. Regan in New York at

To contact the editor responsible for this story: Michael P. Regan at

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